01 May Can solar at home be classified as business use?
Now before I start this isn’t tax advice. I’m not helping anyone figure out how to claim something they shouldn’t.
My focus today is purely on how lenders view commercial applications for solar being placed on a residence.
There are a lot of people who run their business from home and feel that they should be entitled to the tax benefits of a commercial finance arrangement.
Generally, if an installation address is a home then the assumption is made that a solar purchase is for personal reasons. Commercial lenders have a responsibility not to let obvious breaches slip through the cracks.
If you are financing any asset under a commercial agreement, you’ll usually have to sign a business use declaration. It says amongst other things that “the asset will be used predominately (more than 50%) for business use purposes”.
Using solar as an example this means that more than 50% of the energy generated from the solar goes toward business purposes.
Now think of the energy consumption profile of the person that works from home. Is it really going towards business use? Or are they only just using their computer to send emails and phone to make calls?
There are examples where there is legitimately a case for business use though. Everyone nowadays has a story about a bitcoin miner based at home who is chewing through energy like a kid eating a redskin. As do I. Obviously in this case the majority of the energy is for business use.
To confirm this most of the time a letter/email from the accountant confirming the asset is being used for greater than 50% business use purposes will suffice. This doesn’t mean that a letter from the accountant will always work, it needs to be complemented with a good enough reason.
And again as always, some financiers are more lenient than others. It’s their discretion at the end of the day.