What do you know about the solar tax credit? What I am about to tell may surprise you. Every solar professional talks about how the 30% Tax Credit to reduce the cost of your solar installation, but what are they not telling you about this. I will explain…
The Federal Incentive Tax Credit for Solar or ITC is the most touted incentive for going solar. What it does is give you a credit of 30% based on the amount to install your system. For example, if your system was $30,000 you get a credit of $9,000 taken off of your tax liability. One of the key factors in this is it can also be applied on top of state incentives.
The program itself was almost taken away in 2016 and Congress approved an extension that will phase it out, ending in 2022.
Now – 2019 30% 2020 26% 2021 22% 2022 Gone
There is a great bonus to this…if you need to install a new roof the portion that is covered by your solar panels is eligible to be part of the credit as well.
What is not talked about is the fact that you must have a tax liability to take advantage of your ITC. Any portion left after the first year can be carried forward up to 5 years. Basically if you got a refund you probably are not eligible. Many solar companies fail to explain that if you have no tax liability there is no way to use the credit. This is a CREDIT not a REBATE meaning if you don’t have taxes to pay there is no a way to take advantage of it! Now you can change your tax situation with your accountant to find ways to overcome this and if that interests you I highly recommend it.
So, what is your alternative if you do not have a tax appetite?
There are 5 options:
If you are a new homeowner or recently purchased your home you have 6 months to roll the system into your new mortgage through a program called HomeStyle Energy Mortgage. It’s a program alternative to the PACE program.
PACE stands for Property Assessed Clean Energy, this program utilizes your county property tax to provide financing for your system and clean energy improvements. PACE is not in every county so that is a drawback for it as an option.
If you have been in your home for a number of years then you can use the equity that you have accrued to cover your system. This requires sitting down with you local banker to discuss the details. Banks have become very eager to help homeowners use this option.
This loan option may work for some, but not everyone. Getting a home improvement loan has some challenges in qualifying and may have a higher interest rate in comparison to what a solar finance company can authorize you. You should look at all your options just to be sure you have covered your bases.
Just see what your financing looks like without the ITC. The main advantage of this option is that it utilizes a flat rate simple interest plan that tends to be significantly more cost effective.
At the end of the day as an energy advisor I help find the option that works best for you, the most important action is to simply go solar. It gives you a tremendous savings over time and is the best route for your wallet and the environment. Crew makes it simple to go solar, all we need is to look at your energy profile from your electricity bills to make a plan. Email your electricity bill to the address below and I will get back to you with your solar options.
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Go forth and spread sunshine,
Independent Energy Advisor
Clean Renewable Energy Worldwide