The 2026 Solar Investment Tax Credit (ITC) for Rental Property Owners: What's Changed
Tax credits are great until you try to actually use them. Here's what the 2026 ITC actually looks like for someone who owns rental property.
Part of our guide to commercial solar.
The headline number
A federal Investment Tax Credit is available for qualifying solar, and it can stack with bonus depreciation. Solar and storage have different federal credit deadlines, and credit value depends on the project, its ownership, its construction dates and the eligibility requirements it meets. Qualifying solar that begins construction after July 4, 2026 generally must be placed in service by December 31, 2027; storage follows separate rules. Confirm your own position with your tax adviser against our federal tax credit summary.
How it works for rental property
If you (or your LLC) own the system:
- Claim the credit the project actually qualifies for against federal tax liability — the rate depends on construction dates, labour and sourcing requirements and any bonus you qualify for
- Take MACRS accelerated depreciation on the qualifying basis
- Combined, these can materially reduce the effective system cost in the early years. The size of that reduction is project-specific and needs your CPA's numbers, not a rule of thumb.
If a PPA provider owns the system:
- They take the credit
- You don't pay capex but also don't claim depreciation
- Trade-off is captured in your PPA rate (usually a cleaner deal for non-tax-appetite owners)
The transferability rule (the big 2024 change)
The Inflation Reduction Act made the ITC transferable to unrelated third parties. Translation: even if you can't use the credit yourself, you can sell it for ~92–94 cents on the dollar to someone who can. This unlocks owned solar for landlords who previously couldn't monetize the credit.
For NOI-managed projects, we facilitate credit transfers when the owner-financing path is the better economic answer.
Energy Communities and Low-Income Bonus
If your property sits in an Energy Community (former fossil fuel region, brownfield, or qualifying census tract), a bonus may apply. A further bonus may apply where the project serves low-income housing and receives an allocation. Both depend on current programme rules and on the project qualifying.
Practical reality: a meaningful share of multifamily properties qualify for at least one of these. We check eligibility during qualification.
What this changes about the decision
Pre-IRA, the tax credit was a "nice extra." Post-IRA, with transferability and stacking, it's often the single biggest factor in PPA-vs-owned. Whether that shortens your recovery period, and by how much, depends on your tax position and the credit the project qualifies for.
What you actually need
- A K-1 / Schedule E that shows enough passive income or a real estate professional status election
- A CPA who has actually filed Form 3468 (the ITC form)
- A clean cost segregation on the system basis
We work with three CPA partners who handle this regularly. If you don't have one, we can introduce.
Disclaimer
This is general guidance, not tax advice. Talk to your CPA before claiming anything.
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