RESIDENTIAL SOLAR CREDITS will suffer a haircut if the homeowner engages in net metering, the IRS said.

The agency also said that residential solar credits can be claimed by homeowners who own solar panels in a community solar array, at least under the right conditions.

The IRS made the statements in November in Notice 2013-70.

Homeowners can claim a tax credit for 30% of the cost of solar equipment that they own and use to generate electricity or supply hot water to their own homes. The equipment must be put in service by December 2016.

The IRS said that if the homeowner generates “more than a minimal amount of excess electricity” that is sold to the local utility through net metering, then he or she can claim the residential solar credit on only a fraction of the equipment cost that corresponds to use of the equipment to generate electricity for the homeowner’s own use. The IRS did not explain whether to look at how electricity is used in the year the equipment is put in service or to make a forward calculation about what use is expected in the future.

Solar residential credits can be claimed on solar panels a homeowner owns in a community solar array whose electricity goes directly into the grid. However, the homeowner must have a direct contract with the utility allowing the homeowner to supply electricity to the utility through net metering and tracking his or her use of electricity from the grid compared to what is supplied from the homeowner’s share of the array. The contract must also say that the homeowner owns the electricity transmitted by the solar panels to the utility grid until drawn from the grid for use in his or her residence. The homeowner should also represent in the contract that, absent unusual circumstances, the panels will not generate more electricity over each time period — for example, each quarter or year — than the homeowner expects to use in his or her residence.

Some manufacturers of solar attic fans have been advertising that the fans qualify for tax credits for energy efficiency improvements. The IRS made clear such credits can only be claimed on the solar element and not the entire fan.