I read your article entitled “Solar and Wind Energy Credits” in the most recent edition of Backwoods Home Magazine. The article implied that one could get a tax credit for solar powered water wells.
I live on ten acres, and during 2008 installed a solar water pump, tank, and two photovoltaic panels. I called the Complex Tax Lawï section of the IRS 800 number system to enquire about the tax refund for 2008, and the man told me that I could NOT get a credit unless the solar panel went to directly power my house or heat my house.
So, at least for residential purposes, I am out of luck. The same individual told me that the latest law (2009) still only applies to solar for residences, and not water wells, and only the caps have changed.
It was unclear if there are differences for businesses, but my little pecan orchard is not an official business.
If you know absolutely something different from this and better, please let me know.
The reason I wrote the article is this new legislation is complex and I anticipated there would be misunderstandings and limited solar tax advice out there.
The new October, 2008 bill has no limits on the Federal income tax deduction and covers solar equipment purchased (or first placed into operation ) after Jan.1. 2009, which appears to be after your installation was completed. The older solar bill passed in 2005 is almost the same legislation, but has a limit of $2000 tax credit which is what applies to your situation.
Several national solar associations have had their attorneys study this bill and have determined that a solar power system to power a well does meet the requirement for a tax credit, but not the cost of the well or the well pump.
However, these groups ( and Jeff Yago and Backwoods Home magazine) are not tax attorneys and this information is for general information only. You are advised to get the assistance of a tax professional to resolve this question, but I would question any advice from a government website or phone tax help center as the tax code is very complex and most will have only a limited knowledge of any specific code section.