⚠️ 2026 update on the federal tax credit
The 30% federal residential solar tax credit (Section 25D) expired on December 31, 2025 for systems you buy with cash or a loan. Cost and savings figures on this page that assume that credit may be out of date. Two things still apply: Nevada's sales-tax and property-tax exemptions and NV Energy net metering, and systems on a lease or PPA may still qualify for a federal incentive through the end of 2027. For numbers that reflect today's incentives, book a free review and talk to a tax professional about your situation.
An investor in North Las Vegas (single-family rental, 1,950 sqft, long-term tenant on a lease where utilities are tenant-paid) installed a 6 kW system to lower the property's vacancy risk and add to the building basis. Cash cost (Nevada sales-tax exempt): $17,100. Important: this is a rental, so the math runs on the commercial Investment Tax Credit (Section 48E), not the residential one. The residential credit (Section 25D) expired December 31, 2025 for homeowners who buy — but the commercial ITC for income-producing property is still available in 2026 for projects that begin construction by the current statutory deadline. Payback: 7.2 years on the rental cash-flow improvement. This is a different math than primary-residence solar, and the rules trip people up. Here’s the full picture.
The Starting Point
The investor owns three rentals in 89031 and 89032 and was getting tenant pushback on summer bills. Their tenant on this property was paying $260–$340/month to NV Energy in July and August and renegotiating rent every year because of it. The landlord's calculation was simple: a tenant who can keep their utility bill flat is a tenant who renews. Turnover on this property historically cost about $2,400 in vacancy + cleaning + leasing fees per cycle. Stabilizing the tenant for an extra year was worth real money.
Twelve-month tenant usage averaged 980 kWh/month — modest, because it's a smaller home with no pool. Roof was a 2018 asphalt shingle in good condition, south-facing. The home itself was a 1990s build with original electrical service that needed a small upgrade to handle the solar interconnection — we caught that on the site visit, and the cost was already baked into the quote.
How the Tax Credit Works on a Rental
This is where it gets interesting and where people get it wrong. The Residential Clean Energy Credit (Section 25D) was for the owner's primary or secondary residence — and it expired December 31, 2025 for purchased systems. It never applied to property held purely for rental anyway. For a rental, you use the commercial Investment Tax Credit (Section 48E) instead, which still exists in 2026: it operates differently — it's depreciable, the property gets a basis adjustment, and it's claimed on Form 3468 not Form 5695. The commercial credit has its own begin-construction deadline under the 2025 law, so the timing window matters — confirm current eligibility with your CPA before you commit.
For this investor: 30% credit on Form 3468, plus they get to depreciate 85% of the system basis over 5 years (MACRS), plus a one-time bonus depreciation depending on tax year. The combined first-year tax benefit was meaningfully more than 30% — but it requires actual passive income or active material participation to use. We pointed the investor to their CPA for the final structure. I am not a CPA. I’ve seen enough rental solar deals to flag the major levers, but the actual tax filing belongs to a tax professional.
One thing investors often miss: if you ever convert the rental to a primary residence (or vice versa), the credit treatment retroactively shifts. There are recapture rules. If you’re likely to flip the property within five years, your CPA needs to model that scenario before you commit. We didn’t need to here — the investor’s plan is hold-for-cash-flow, not flip.
What We Designed
A 6 kW system: 15 panels at 400W, string inverter, no battery. Cost-optimized — this is a rental, not a forever home, and the goal was to land the lowest possible installed cost per watt while still using Tier 1 panels with transferable warranties. $2.85/W gross. The warranty transferability was important to the investor in case they sell. A non-transferable warranty would knock 15–20% off the system’s contribution to property value at sale time.
The Numbers
| Item | Before | After |
|---|---|---|
| Tenant’s NV Energy bill (avg) | $190 | $58 |
| Annual tenant savings | $1,584 | |
| Rent increase agreed | +$110/month | |
| Landlord cash flow gain | $1,320/year | |
| System cost (cash, NV sales-tax exempt) | $17,100 | |
| Commercial ITC (Sec 48E, rental only) | −$5,130 (still available in 2026; deadline-gated) | |
| Net cost after commercial ITC | $11,970 | |
| Simple payback (cash-flow only) | 7.2 years | |
The investor's actual after-tax payback is faster once you layer in MACRS depreciation, but I'm showing the conservative cash-flow-only number. The tenant came out ahead on net (saving more than the rent bump), and the landlord stabilized the lease.
The Permit and HOA Part
No HOA on this property. North Las Vegas permit took 8 business days. NV Energy interconnection at net metering rates took 12 days. The tenant was inconvenienced for one day during install — we coordinated through the property manager to schedule on a weekday morning when the tenant was at work. They came home to a finished install and a panel-by-panel sticker pack on the kitchen counter explaining what we’d done.
One nuance specific to rentals: NV Energy puts the net-metering account in the name of whoever pays the bill. On this property that was the tenant. So the credits flow to the tenant’s account, not the landlord’s — which is fine because the tenant is the one consuming the power, but it means the landlord can’t directly capture the value. The capture mechanism is the rent renegotiation, not the utility credit.
What Surprised the Investor
That the tenant didn't push back on the small rent increase. We'd actually pre-built the math sheet for the investor to share — showing the tenant their projected NV Energy savings vs. the rent bump — and the tenant signed a 24-month renewal the same week. Solar turned a one-year tenant into a two-year tenant, which on a rental is worth real money in turnover-cost avoidance.
The other surprise: the investor’s appraiser, when refinancing the property a few months later, valued the solar system at roughly $9,000 of added home value. That’s less than the gross install cost but more than the after-credit cost — so on paper, the investor netted out positive on equity from day one, before counting any cash flow improvement.
What We'd Do Differently
I'd have suggested a slightly larger system — maybe 7 kW — to leave some headroom if a future tenant has higher usage (an EV charger, a home office). The marginal cost per kW drops as you scale up, and oversizing slightly on a rental is cheap insurance against the next tenant having different needs. The current tenant doesn’t fully use the 6 kW system; the next tenant might over-use it.
The Total Cost Stack
- Panels (15 × 400W): $5,400
- Inverter, racking, BOS: $3,400
- Electrical: $1,500
- Permits + interconnection: $600
- Labor: $5,400
- Margin + overhead: $800
- Cash price (NV sales-tax exempt): $17,100
- After commercial Sec 48E ITC (rental only, deadline-gated): $11,970
Why This Isn't Typical (or Why It Is)
Rental solar math is not the same as primary-residence math. The credit code section is different, the depreciation rules matter, and the rent renegotiation is the actual mechanism that makes the deal work. Don't apply this case to your own primary home — different rules. And don't apply it to a rental without your CPA modeling the depreciation. Talk to the IRS guidance and your accountant.
If you have multiple rentals, the math compounds. The investor on this case is now considering systems on the other two properties. Each one would replicate the cash-flow logic, and the depreciation stacks across the portfolio.
If you own rentals in 89031 / 89032 / 89030 and want to talk through the math, request a quote. Or read the broader Las Vegas solar guide. Background on me at about Daniel.