I 

109TH CONGRESS 

1ST SESSION H. R. 17

To amend the Internal Revenue Code of 1986 to allow a credit for residential 

solar energy property. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 4, 2005

Mr. HAYWORTH introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL

To amend the Internal Revenue Code of 1986 to allow a 

credit for residential solar energy property.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Residential Solar En5 ergy Tax Credit Act’’. 

6 SEC. 2. CREDIT FOR RESIDENTIAL SOLAR ENERGY PROP7 ERTY. 

8 (a) IN GENERAL.—Subpart A of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 

10 1986 (relating to nonrefundable personal credits) is 
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1 amended by inserting after section 25B the following new 

2 section: 

3 ‘‘SEC. 25C. RESIDENTIAL SOLAR ENERGY PROPERTY. 

4 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in5 dividual, there shall be allowed as a credit against the tax 

6 imposed by this chapter for the taxable year an amount 

7 equal to the sum of—

8 ‘‘(1) 15 percent of the qualified photovoltaic 

9 property expenditures made by the taxpayer during 

10 such year, and 

11 ‘‘(2) 15 percent of the qualified solar water 

12 heating property expenditures made by the taxpayer 

13 during the taxable year. 

14 ‘‘(b) LIMITATIONS.—

15 ‘‘(1) MAXIMUM CREDIT.—The credit allowed 

16 under subsection (a) shall not exceed—

17 ‘‘(A) $2,000 for each system of property 

18 described in subsection (c)(1), and 

19 ‘‘(B) $2,000 for each system of property 

20 described in subsection (c)(2). 

21 ‘‘(2) TYPE OF PROPERTY.—No expenditure may 

22 be taken into account under this section unless such 

23 expenditure is made by the taxpayer for property in24 stalled on or in connection with a dwelling unit 
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1 which is located in the United States and which is 

2 used as a residence. 

3 ‘‘(3) SAFETY CERTIFICATIONS.—No credit shall 

4 be allowed under this section for an item of property 

5 unless—

6 ‘‘(A) in the case of solar water heating 

7 equipment, such equipment is certified for per8 formance and safety by the non-profit Solar 

9 Rating Certification Corporation or a com10 parable entity endorsed by the government of 

11 the State in which such property is installed, 

12 and 

13 ‘‘(B) in the case of a photovoltaic system, 

14 such system meets appropriate fire and electric 

15 code requirements. 

16 ‘‘(c) DEFINITIONS.—For purposes of this section—

17 ‘‘(1) QUALIFIED SOLAR WATER HEATING PROP18 ERTY EXPENDITURE.—The term ‘qualified solar 

19 water heating property expenditure’ means an ex20 penditure for property that uses solar energy to heat 

21 water for use in a dwelling unit with respect to 

22 which a majority of the energy is derived from the 

23 sun. 

24 ‘‘(2) QUALIFIED PHOTOVOLTAIC PROPERTY EX25 PENDITURE.—The term ‘qualified photovoltaic prop-
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1 erty expenditure’ means an expenditure for property 

2 that uses solar energy to generate electricity for use 

3 in a dwelling unit. 

4 ‘‘(3) SOLAR PANELS.—No expenditure relating 

5 to a solar panel or other property installed as a roof 

6 (or portion thereof) shall fail to be treated as prop7 erty described in paragraph (1) or (2) solely because 

8 it constitutes a structural component of the struc9 ture on which it is installed. 

10 ‘‘(4) LABOR COSTS.—Expenditures for labor 

11 costs properly allocable to the onsite preparation, as12 sembly, or original installation of the property de13 scribed in paragraph (1) or (2) and for piping or 

14 wiring to interconnect such property to the dwelling 

15 unit shall be taken into account for purposes of this 

16 section. 

17 ‘‘(5) SWIMMING POOLS, ETC., USED AS STOR18 AGE MEDIUM.—Expenditures which are properly al19 locable to a swimming pool, hot tub, or any other 

20 energy storage medium which has a function other 

21 than the function of such storage shall not be taken 

22 into account for purposes of this section. 

23 ‘‘(d) SPECIAL RULES.—For purposes of this sec24 tion—
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1 ‘‘(1) DOLLAR AMOUNTS IN CASE OF JOINT OC2 CUPANCY.—In the case of any dwelling unit which is 

3 jointly occupied and used during any calendar year 

4 as a residence by 2 or more individuals the following 

5 shall apply: 

6 ‘‘(A) The amount of the credit allowable 

7 under subsection (a) by reason of expenditures 

8 (as the case may be) made during such cal9 endar year by any of such individuals with re10 spect to such dwelling unit shall be determined 

11 by treating all of such individuals as 1 taxpayer 

12 whose taxable year is such calendar year. 

13 ‘‘(B) There shall be allowable with respect 

14 to such expenditures to each of such individ15 uals, a credit under subsection (a) for the tax16 able year in which such calendar year ends in 

17 an amount which bears the same ratio to the 

18 amount determined under subparagraph (A) as 

19 the amount of such expenditures made by such 

20 individual during such calendar year bears to 

21 the aggregate of such expenditures made by all 

22 of such individuals during such calendar year. 

23 ‘‘(2) TENANT-STOCKHOLDER IN COOPERATIVE

24 HOUSING CORPORATION.—In the case of an indi25 vidual who is a tenant-stockholder (as defined in sec-
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1 tion 216) in a cooperative housing corporation (as 

2 defined in such section), such individual shall be 

3 treated as having made his tenant-stockholder’s pro4 portionate share (as defined in section 216(b)(3)) of 

5 any expenditures of such corporation. 

6 ‘‘(3) CONDOMINIUMS.—

7 ‘‘(A) IN GENERAL.—In the case of an indi8 vidual who is a member of a condominium man9 agement association with respect to a condo10 minium which he owns, such individual shall be 

11 treated as having made his proportionate share 

12 of any expenditures of such association. 

13 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO14 CIATION.—For purposes of this paragraph, the 

15 term ‘condominium management association’ 

16 means an organization which meets the require17 ments of paragraph (1) of section 528(c) (other 

18 than subparagraph (E) thereof) with respect to 

19 a condominium project substantially all of the 

20 units of which are used as residences. 

21 ‘‘(4) JOINT OWNERSHIP OF ITEMS OF SOLAR

22 ENERGY PROPERTY.—

23 ‘‘(A) IN GENERAL.—Any expenditure oth24 erwise qualifying as an expenditure described in 

25 paragraph (1) or (2) of subsection (c) shall not 
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1 be treated as failing to so qualify merely be2 cause such expenditure was made with respect 

3 to 2 or more dwelling units. 

4 ‘‘(B) LIMITS APPLIED SEPARATELY.—In 

5 the case of any expenditure described in sub6 paragraph (A), the amount of the credit allow7 able under subsection (a) shall (subject to para8 graph (1)) be computed separately with respect 

9 to the amount of the expenditure made for each 

10 dwelling unit. 

11 ‘‘(5) ALLOCATION IN CERTAIN CASES.—If less 

12 than 80 percent of the use of an item is for nonbusi13 ness residential purposes, only that portion of the 

14 expenditures for such item which is properly allo15 cable to use for nonbusiness residential purposes 

16 shall be taken into account. For purposes of this 

17 paragraph, use for a swimming pool shall be treated 

18 as use which is not for residential purposes. 

19 ‘‘(6) WHEN EXPENDITURE MADE; AMOUNT OF

20 EXPENDITURE.—

21 ‘‘(A) IN GENERAL.—Except as provided in 

22 subparagraph (B), an expenditure with respect 

23 to an item shall be treated as made when the 

24 original installation of the item is completed. 
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1 ‘‘(B) EXPENDITURES PART OF BUILDING

2 CONSTRUCTION.—In the case of an expenditure 

3 in connection with the construction or recon4 struction of a structure, such expenditure shall 

5 be treated as made when the original use of the 

6 constructed or reconstructed structure by the 

7 taxpayer begins. 

8 ‘‘(C) AMOUNT.—The amount of any ex9 penditure shall be the cost thereof. 

10 ‘‘(e) BASIS ADJUSTMENTS.—For purposes of this 

11 subtitle, if a credit is allowed under this section for any 

12 expenditure with respect to any property, the increase in 

13 the basis of such property which would (but for this sub14 section) result from such expenditure shall be reduced by 

15 the amount of the credit so allowed. 

16 ‘‘(f) TERMINATION.—The credit allowed under this 

17 section shall not apply to taxable years beginning after 

18 December 31, 2010.’’. 

19 (b) CONFORMING AMENDMENTS.—

20 (1) Subsection (a) of section 1016 of such Code 

21 is amended by striking ‘‘and’’ at the end of para22 graph (30), by striking the period at the end of 

23 paragraph (31) and inserting ‘‘; and’’, and by add24 ing at the end the following new paragraph: 
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1 ‘‘(32) to the extent provided in section 25C(e), 

2 in the case of amounts with respect to which a credit 

3 has been allowed under section 25C.’’. 

4 (2) The table of sections for subpart A of part 

5 IV of subchapter A of chapter 1 of such Code is 

6 amended by inserting after the item relating to sec7 tion 25B the following new item:

‘‘Sec. 25C. Residential solar energy property.’’.

8 (c) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to taxable years ending after De10 cember 31, 2005.

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