“In the absence of this commence-construction guidance, tax equity partners were growing cautious about project risk.”
The Internal Revenue Service released a new guidance Friday that establishes when the construction of a solar facility starts to qualify for the solar Investment Tax Credit.
The guidance, Notice 2018-59, provides two methods for determining the “commence-construction” date: 1) starting physical work of a significant nature or 2) meeting the “5 percent safe harbor test” by incurring 5 percent or more of the total cost of the facility in the year that construction begins.
Both residential and commercial solar projects may qualify for the full 30 percent Investment Tax Credit (ITC) through 2019, as long as the project is placed into service before 2024. A prior ruling required completion in the same year.