Guide · small solar projects

Selling a small solar tax credit

A commercial rooftop, a carport, a community solar farm: credits from about $100,000 to a few million. They sell, but for less than big ones, and fixed costs decide whether a sale is worth it. Here is the arithmetic and the preparation.

Verified 11 Oct 2026 · page reviewed 11 Oct 2026

Who this is for

Owners and developers of solar projects of roughly 100 kilowatts to 5 megawatts: commercial and industrial rooftops, carports, small ground-mount and community solar. The market treats any credit under $10 million as “smaller”^[1]; most of these projects are well below that.

The credit generally belongs to the project’s owner. If you lease the system from someone else, start with them.

Which credit you have

• Construction began before 1 January 2025: usually the legacy §48 energy credit^[2].
• Construction began later: the §48E clean electricity investment credit^[3]. A solar facility whose construction began after 4 July 2026 earns no §48E credit unless it is placed in service by 31 December 2027^[3].
• Foreign-entity rule: a facility whose construction begins after 31 December 2025 earns no §48E credit if it includes material assistance from a prohibited foreign entity^[3]. Buyers will ask for the calculation; see foreign-entity rules.

Three rules that favour small solar

• Under 1 MW (AC): the full 30% without the wage rules. §48E pays 6%, or 30% if the facility meets the prevailing wage and apprenticeship requirements or has a maximum net output of less than 1 megawatt, measured in alternating current^[3]. Buyers will still want evidence of the AC rating.
• Up to 5 MW (AC): interconnection costs count. For a facility of not more than 5 megawatts (AC), the amounts you pay for qualified interconnection property are part of the qualified investment^[3]. Make sure they are in your cost basis.
• Under 5 MW (AC): the low-income communities bonus. A facility under 5 megawatts (AC) in a low-income community or on Indian land, or part of a qualified low-income residential building or economic benefit project, can apply for an allocation that adds 10 or 20 percentage points^[3]. The allocation letter is the evidence a buyer will ask for.

The energy community and domestic content bonuses are on the §48E page.

Is it worth selling? The arithmetic

Small, single-project, uninsured credits tend to sell for about 80 to 89 cents per dollar of credit^[4]. Then come the costs: a broker or marketplace fee of 1% to 3% of the credit, and legal and diligence costs that are often $40,000 or more per deal^[5]. Fixed costs weigh most on the smallest credits.

Illustration, at 85 cents, a 2% broker fee and $40,000 of fixed costs:

Your own costs may be lower or higher; the Credit Value Estimator runs the price and fee ranges for your amount. In practice there is no legal minimum, but most transactions are $1 million or more, and many intermediaries and insurers prefer that size^[6].

If your business owes enough federal income tax to use the credit itself, ask your tax adviser to compare that with a sale before you go to market.

What a buyer will ask a small seller for

• Your registration number. Each facility needs one before the return that makes the election^[7]. See pre-filing registration.
• A cost-segregation report. It sets out which costs qualify; 85% of buyer advisers say they review these reports in depth^[1].
• A legal memo on eligibility, the placed-in-service date, any bonus amounts and how construction began^[1].
• Placed-in-service evidence (interconnection approval, permission to operate) and the AC rating.
• Wage and apprenticeship records if the facility is 1 MW (AC) or larger and you claim 30%^[3].
• Bonus evidence: the energy community analysis, the domestic content certification or the low-income allocation letter.
• The foreign-entity analysis if construction began after 2025^[3].

The Readiness Checker turns this into a list of what you have and what is missing.

Insurance or an indemnity

An investment credit can be recaptured for five years if the property is disposed of or stops qualifying, and under §6418 the buyer owes that recapture^[8]. Buyers therefore ask for protection:

• Insurance. Premiums for smaller credits run about 2% to 5%^[1], and insured credits often sell for more^[1]. Insurance can be hard to obtain, or uneconomic, for deals under about $3 to $5 million with a single sponsor^[9].
• A parent indemnity. In 2024 more than half of all transfers (55.3%) used a parent indemnity rather than insurance^[1]. For a small seller with a creditworthy parent, it is often the practical route.

Timeline, with dates

1. Place the project in service.
2. Register after it is in service and at least 120 days before your return’s due date, including extensions^[10]. If your extended due date is 15 October 2027, that means 17 June 2027 at the latest; earlier is safer.
3. Find a buyer and sign a term sheet. In a sale of a credit that already exists, cash typically arrives at closing, often 4 to 8 weeks after a signed term sheet^[5].
4. Get paid inside the window: from the first day of the tax year in which the credit arises to the due date, with extensions, of the return on which you make the election^[11].
5. Elect on your original return, filed on time, with the transfer election statement signed by both sides^[12]. See Form 3800 for transfers.

A worked example, start to finish

A hypothetical project, to show how the dates and the money fit together. Your figures will differ.

The project. A warehouse owner, a calendar-year corporation, installs a 900 kW (AC) rooftop system. Construction began in 2025 and the system is placed in service on 16 March 2026. Qualified investment, including interconnection costs, is $1,350,000. Because the system is under 1 MW (AC), it earns 30% without the wage and apprenticeship rules^[3]: a $405,000 §48E credit.

The money, at 86 cents per dollar, inside the small-deal range^[4]:

If the owner’s company had enough federal income tax to use the $405,000 itself, the sale would have to beat that; see sell or keep.

Ways to improve the price

• Aggregate. A portfolio of small projects, aggregated and insured, can move up toward the middle of the price range^[4].
• Prepare before you market the credit. A complete file shortens diligence and supports insurance approval^[1].
• Compare routes. A broker or marketplace costs 1% to 3%; selling directly to a buyer avoids that fee but narrows the field^[5].
• Know the market. The prices page sets every public price report side by side.