How Does The Federal Tax Credit Affect The Price Of Your Solar System?
As you have probably heard, the Government has extended the Federal Tax Credit for solar installations until 2020! If you choose to purchase your solar system instead of leasing, you can claim the credit and will receive a credit on your next federal tax return equal to 30% of what you paid for the system and install. Add this to the benefits received from the net metering program, and that becomes savings that make solar an attractive proposition for anyone.
Who is eligible?
You are eligible if:
- You are a homeowner who purchased their system outright through cash or a solar loan. Leases do not qualify.
- You need to owe federal taxes for the tax credit to apply.
You are not eligible if:
- If you do not have any tax liability. The credit will simply reduce the amount of tax you owe, so if you don’t owe any tax, this credit will not be able to help you.
- If you’re thinking of leasing your panels or entering a PPA contract, credit does not apply and the solar company will receive the savings. This is because you will not actually own the system; you are simply making savings on your electricity bill each year, rather than making an investment.
- If you’re renting and do not own your home. It is up to the owner of the property to install the panels, and an agreement will then be made with them. So again, you will not be eligible.
What Do You Need To Qualify?
To receive your solar tax credit, here’s a little checklist to get you started with what you need:
- U.S. Individual Income Tax Return – Form 1040
- Residential Energy Credits – Form 5695
- Instructions on how to fill out each form
- Help from a tax professional
Your solar installer and tax consultant will be able to help you through all the finer details, but if you are also receiving a rebate from your utility company or local Government, you will deduct those savings before you start calculating your tax credit. That way you’ll receive the largest savings available.
The Government supports solar in a huge way, which is why they’re offering such great savings to homeowners. If you’re considering investing in a solar system to save thousands for years to come, start now. With all the incentives, rebates and credits on offer, there has never been a better time to switch to solar.
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