Different Tax Credits And Tax Incentives For Solar System Purchase

January 1, 2015 News

If you are a homeowner and want to purchase and install solar systems, then you are eligible for many tax incentives and credits to choose from. Tax credits for solar power were legalized in the year 2008, as included in Emergency Economic Stabilization Act for renewable technologies and energy efficient resources.

The information regarding tax benefits, credits, depreciation, and incentives is important to make users aware of potential expenses risks and benefits and also helps in avoiding scams and aggressive salesperson. Here are the lists of offerings by solar investment tax credit:

  • Residential and Commercial Consumer:

Solar Tax credits for commercial and residential consumers are available for both solar water heating system and solar photovoltaic.

  • Tax Liability:

It is important for a consumer to have tax liability to take advantage of solar tax credit.

  • Tax Credit Carry forward:

Tax credit is a one-time credit, but can be carried forward for next year if not completely used for system installation. Rules may differ between commercial and residential tax filers.

  • Value:

Residential consumers with high income tax slab often see comparatively higher value. The reason being residential electricity expenses are mostly paid with after-tax amount

  • Commercial Tax Benefits:

Solar power systems that are business owned can be also eligible for 5-Years MACRS Accelerated Depreciation through IRS federal form. To know more about commercial tax incentives please contact your tax attorney

  • Non-Profit Organization:

Non Profit organizations and Municipalities are already tax exempt, so they do not need to worry about tax issues.

  • Property Tax:

Home owners with solar power system can also exempt the equipment from the property taxes. In reverse they can sell excess electricity to the power company and seek for the reimbursement for the part of installation and purchase.

  • Popularity:

The real question trending is – will solar rebates stick around? With growing popularity of solar power in all the states has led to sudden drop in the availability of reimbursement to the consumers.

  • Third Party Advantages:

The owner of solar system power has ability to take benefit of solar tax credit. Companies with no tax liability at times use third party solar power system owner who arranges and install the system. It passes along the saving to the solar power host customer by giving advantage of tax credit to third party.

  • Bonus Depreciation:

It means acceleration of the applicable depreciation. In 2011, bonus depreciation was raised to 100% for solar projects. In 2012, bonus depreciation was reduced to 50%for projects

If home owners want to maximize the efficiency of the current solar power system like windows, appliances, and insulation, then they need to bear some important points in mind such as, if they are looking to participate to receive solar power incentives, then they should get energy audit of their house to check if they meet efficiency standards.

Many states also offer rebates for solar heaters which can reduce water heating charges by more than 75 percent.  The increased use and switch to solar power system is an incredible, attractive option for financing with energy audits.