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The number one question homeowners ask about Propel: “Do I get the tax credit?” Short answer: you do not file for it, but you benefit from it. Here is the complete, clear tax picture.
Quick Answer
With Propel solar, you do NOT claim the federal tax credit. The Section 48E ITC (30-50%) is claimed by the third-party business entity that owns the system during years 1-5. You benefit indirectly through a lower financed amount (30-40% reduction). No tax forms to file, no IRS interaction. Monthly payments are NOT tax-deductible (personal loan). Solar is property-tax exempt in both Maine and Texas. Sales tax exempt in both states. Year 5 ownership transfer is NOT a taxable event. Bottom line: you don't have to do anything on your taxes.
This is the most reassuring thing about Propel's tax treatment: as a homeowner, there is nothing you need to do on your taxes related to the solar system. No forms to file, no credits to claim, no deductions to track, and no documentation to gather. The entire tax benefit is handled by the third-party business owner and built into your lower monthly payment.
The Investment Tax Credit (ITC) is the centerpiece of solar financing in 2026. Under Propel's third-party ownership structure, the ITC flows differently than it would under a traditional homeowner purchase. Understanding this flow clears up the biggest source of confusion.
Before January 1, 2026, homeowners who purchased solar panels could claim the residential ITC under Section 25D. That credit was 30% of the installed cost, applied directly to the homeowner's federal income tax liability. Section 25D has now expired. Individual homeowners can no longer claim any federal solar tax credit.
Section 48E — the commercial clean energy ITC — is still active. But it is only available to business entities. Propel uses a third-party business entity to own the solar system during years 1-5, which makes the installation qualify as commercial energy property. The business entity claims the ITC, and the financial benefit is passed through to you in the form of a lower financed amount.
Consider a $30,000 solar system. With the 40% ITC (30% base + 10% FEOC bonus), the third-party owner receives a $12,000 tax credit from the IRS. This $12,000 is factored into the Propel financing structure, reducing the effective amount you finance to approximately $18,000. Over 25 years at 8.79% APR, you pay roughly $143/month instead of what would be approximately $238/month if you financed the full $30,000 through a traditional loan at the same rate. The ITC saves you about $95/month — or $28,500 over the life of the loan.
You never see the $12,000 tax credit. You never file for it. You never interact with the IRS about it. Your benefit is the lower monthly payment — and it starts from day one.
We hear from homeowners all the time: “My neighbor who bought solar in 2024 said I need to fill out Form 5695.” That was true under the old Section 25D residential credit. Propel is different. Here is what you do NOT need to do.
No Form 5695 (Residential Energy Credits)
Form 5695 is for homeowners claiming the residential clean energy credit under Section 25D. Since that section expired December 31, 2025, no homeowner can file this form for solar installed in 2026 or later. Even if you could, it would not apply to Propel because the third-party owner — not you — is the system owner for tax purposes.
No Schedule A Solar Deductions
There is no line item on Schedule A (Itemized Deductions) for solar panel costs. Your monthly Propel payment is a personal loan payment. Personal loan interest is not deductible under the Tax Cuts and Jobs Act. Itemizing deductions will not help with Propel.
No 1099 Forms from Concert Finance
Concert Finance does not issue a 1099-INT for the interest portion of your payments because the loan is a consumer credit product similar to an auto loan. There is no form to receive, no interest deduction to take, and no tax reporting requirement.
No Depreciation Calculations
The third-party business owner claims MACRS depreciation on the solar system as a business asset. You do not own the system during years 1-5, so depreciation does not apply to you. After year 5, the system is a home improvement, not a depreciable business asset — unless you have a qualifying home office.
No Capital Gains at Year 5 Transfer
The ownership transfer at year 5 is not a sale. It is the exercise of a pre-agreed Early Buyout Option that was contractually set at loan origination. You are not purchasing an asset — you are receiving what was always part of the deal. No capital gains, no income recognition, no Form 8949.
Your monthly Concert Finance loan payment is classified as a consumer personal loan payment. This matters for tax purposes because it determines how the IRS treats the interest portion of your payment.
Under the Tax Cuts and Jobs Act (TCJA), which remains in effect through 2025 and has been partially extended, interest on personal loans is not tax-deductible. This applies regardless of whether the loan funds are used for a home improvement like solar. The distinction matters: a home equity loan used for solar would have deductible interest, but the Concert Finance loan is structured as a personal loan, not a secured mortgage product.
| Feature | Propel (TPO) | Traditional Loan | Solar Lease |
|---|---|---|---|
| Federal ITC (homeowner) | No (third-party claims) | No (25D expired) | No (lessor claims) |
| ITC benefit to you | 30-40% lower cost | None | 10-20% lower lease |
| Interest deductible | No (personal loan) | No (personal loan) | N/A (no loan) |
| Forms to file | None | None | None |
| Property tax impact | Exempt (ME/TX) | Exempt (ME/TX) | Exempt (ME/TX) |
| Sales tax | Exempt (ME/TX) | Exempt (ME/TX) | Exempt (ME/TX) |
| Ownership transfer tax | None (yr 5 auto) | N/A (own from day 1) | N/A (never own) |
What about HELOC refinancing after year 5?
After the year 5 ownership transfer, you could theoretically refinance the remaining Propel loan balance into a home equity loan or HELOC, which would make the interest tax-deductible. The IRS allows mortgage interest deductions on loans used to “buy, build, or substantially improve” your home, and solar panels qualify. However, this requires a separate application, appraisal, and closing costs. Whether the interest savings justify the refinancing costs depends on your remaining balance and tax bracket. Consult a CPA before pursuing this strategy.
One of the best tax benefits of solar is the property tax exemption. Solar increases your home value by approximately 4%, but in states with solar property tax exemptions, that increase does not raise your property tax bill.
For waitlist states, property tax exemptions also apply: Massachusetts (100% exempt), Connecticut (100% exempt for 15 years), New Hampshire (municipalities may adopt exemption), Rhode Island (varies by municipality), Vermont (exempt), New Jersey (100% exempt), and Pennsylvania (varies by municipality).
Both of Propel's current live states exempt solar equipment from sales tax, providing an additional savings at the point of purchase.
Maine: Sales Tax Exempt
Maine exempts solar energy equipment from its 5.5% sales tax. For a $30,000 system, this saves $1,650 that you would otherwise pay. This exemption applies to panels, inverters, racking, wiring, and battery storage. The exemption is automatic — no application required.
Texas: Sales Tax Exempt
Texas exempts solar panels and related equipment from its 6.25% state sales tax (plus local sales taxes up to 2%). For a $30,000 system in Houston (8.25% combined rate), this saves $2,475. The exemption covers all solar energy devices including battery storage.
The automatic ownership transfer at year 5 is one of the most-asked-about aspects of Propel from a tax perspective. Homeowners worry it could trigger a taxable event. It does not.
Here is why: the Early Buyout Option (EBO) price was set at loan origination and built into your monthly payments. You have been paying for the ownership transfer since month one. At month 60, the EBO is exercised by Concert Finance on your behalf. The system title transfers from the third-party owner to you. There is no sale. There is no purchase price that you pay separately. There is no gain or loss to recognize.
From the IRS perspective, the ownership transfer is the fulfillment of a pre-existing contractual obligation. The third-party owner has already claimed the ITC, taken any applicable depreciation, and fulfilled the 5-year recapture period. The transfer is clean — no recapture issues, no gain recognition, no forms to file.
Once you own the system, it becomes a home improvement — similar to a kitchen renovation or new roof. It increases your home's basis (cost basis for capital gains purposes) and your home's market value. If you sell your home, the solar system is part of the home and included in the sale price. The home sale exclusion ($250,000 single / $500,000 married) would apply to any gain, including the portion attributable to the solar system, as long as you meet the 2-of-5-year ownership and use test.
There is one narrow exception where Propel solar could have tax deduction implications: if you have a qualifying home office. Under IRS rules, if you use a portion of your home “regularly and exclusively” for business, you can deduct a proportional share of home expenses — including electricity.
Since your solar system reduces or eliminates your electricity bill, the calculation gets nuanced. During years 1-5, you do not own the system, so you are essentially paying for energy services through your Propel loan payment. A portion of that payment attributable to the home office space could potentially be treated as a business electricity expense.
After year 5, when you own the system, the analysis is cleaner: your ongoing loan payment includes the cost of electricity generation for your entire home, and the business-use percentage would apply.
Consult a CPA for Home Office Deductions
The home office deduction for Propel solar payments is a gray area that depends on your specific situation: the percentage of your home used for business, whether you use the simplified or regular method, and how your CPA classifies the Propel payment. NuWatt does not provide tax advice. We strongly recommend discussing this with a qualified CPA or tax professional before claiming any deductions related to your Propel system.
The current Section 48E ITC is available for clean energy projects that begin construction before July 4, 2026. The One Big Beautiful Bill Act (OBBBA) establishes this as the phase-down trigger date. Projects that commence construction after this date face reduced or eliminated ITC benefits.
For Propel homeowners, this deadline is managed by NuWatt and Concert Finance. Your system must begin construction before July 4, 2026, which means your Propel application should be submitted well in advance — ideally by spring 2026. The September 30, 2026 application deadline for Concert Finance provides buffer, but construction commencement is the critical tax milestone.
July 4, 2026 — Section 48E Construction Deadline
Projects must begin construction before this date for the full ITC with FEOC bonus. The third-party owner claims the ITC based on when construction commences, not when the system is completed or activated. NuWatt manages construction scheduling to ensure compliance.
Your terms are locked at origination
Once your Propel loan is originated and the system begins construction, your financing terms are locked. Future changes to Section 48E do not retroactively affect your monthly payment or the ITC benefit that was captured at the time of installation. The third-party owner claims the ITC in year 1, and the 5-year recapture period runs from that date. By year 5, when ownership transfers to you, the recapture period has passed completely.
Not directly. The Section 48E Investment Tax Credit (30-50%) is claimed by the third-party business entity that owns the solar system during years 1-5. You benefit indirectly because this ITC reduces the financed amount by 30-40%, which lowers your monthly payment. You do not file any tax forms related to the ITC, and there is no tax credit for you to claim on your personal return.
No. The solar system is owned by a third-party business entity during years 1-5, so it does not appear on your personal tax return. Your monthly loan payment to Concert Finance is a personal loan payment, similar to an auto loan or personal loan. You will not receive a 1099-INT for the interest paid, and the interest is not tax-deductible. After the year 5 ownership transfer, the system becomes your property and adds value to your home, but there is still nothing to report.
No. Your monthly Concert Finance loan payments are not tax-deductible. The loan is classified as a consumer personal loan, not a mortgage or home equity loan. The interest on personal loans is not deductible under the Tax Cuts and Jobs Act. The exception would be if you refinance the Propel loan into a home equity loan or HELOC after year 5 — but that would be a separate transaction with different tax treatment.
No. The automatic ownership transfer at year 5 (via the Early Buyout Option) is not a taxable event for the homeowner. The buyout price was set at loan origination and is already built into your monthly payments. There is no sale occurring — you are simply receiving what was always contractually promised. No capital gains, no income recognition, no tax forms. The system simply becomes your property.
In most states where Propel is available, solar installations are exempt from property tax increases. Maine provides a full property tax exemption for solar equipment for the life of the system. Texas provides a 100% property tax exemption for solar energy devices. This means your home value increases from the solar system, but your property tax does not increase. During years 1-5, the system is owned by the third-party entity, so it would not affect your property tax assessment regardless.
Maine exempts solar energy equipment from sales tax. Texas also exempts solar panels and related equipment from state sales tax. Since Propel is currently only available in these two states, you will not pay sales tax on your system. If Propel expands to waitlist states, sales tax treatment will vary — Massachusetts, Connecticut, and New Hampshire also exempt solar from sales tax.
Potentially, but with significant caveats. If you use a portion of your home exclusively for business (qualifying home office under IRS rules), you may be able to deduct a proportional share of your electricity costs, which would include the solar offset. However, during years 1-5, you do not own the system. After year 5, you could potentially deduct the business-use percentage of your solar-related costs. This is a complex area — consult a CPA or tax professional for your specific situation.
Your Propel financing terms are locked at origination. The ITC is claimed by the third-party owner in the year the system is placed in service (year 1), not at the ownership transfer. Changes to Section 48E after your system is installed do not affect your monthly payment or the ownership transfer. The One Big Beautiful Bill Act (OBBBA) sets a July 4, 2026 FEOC deadline, but systems that begin construction before that date are grandfathered.
No tax forms, no IRS headaches, no confusion. The ITC benefit is built into your lower monthly payment from day one.
Propel financing provided by Concert Finance. Loans originated by Medallion Bank, Member FDIC. NuWatt does not provide tax advice.
Propel Solar Main Page
Qualifier tool, rate calculator, and program overview.
How Propel Solar Works
Step-by-step guide to the complete Propel process.
Propel Cost Calculator
Estimate your payment by system size and credit tier.
Section 48E Solar Guide
Complete guide to Section 48E and the commercial ITC.
Propel Eligibility Guide
Detailed qualification requirements and tips.
Propel Financing Review
Independent review with pros, cons, and rating.
Elena helps homeowners plan whole-home electrification projects — solar, heat pumps, batteries, and EV charging. She focuses on financing strategies and long-term energy savings.