By CLAREMONT ENERGY ADVISORY COMMITTEE
By Claremont Energy Advisory Committee
Installing solar energy this year has a great advantage over next year with the savings possible through the Investment Tax Credit (ITC) passed in 2015. It provided homeowners, solar companies and industry advocates the opportunity to save 30 percent of the cost of installing a solar energy system from your federal taxes. This is not a rebate, but a credit towards paying federal taxes. That savings will begin to diminish at the end of 2019.
Extensions to the Energy Policy Act of 2005 have continued to offer financial advantages in installing a solar energy system. The last extension was granted federally in 2016, giving both residential and commercial solar installations this 30 percent tax credit. In 2020, the tax credit savings will be reduced to 26 percent. In 2021, the savings will be reduced even further, to 22 percent for both residential and solar installations. Thereafter, beginning in 2022, the federal tax credit will only be offered to commercial installations for a rate of 10 percent.
The ITC allows owners of new solar energy systems to claim the tax credits as soon as the construction of the system is complete, as long as it is operational by December 31, 2023.
To qualify for the solar tax credit, you must own your solar energy system. “Even if you don’t have enough tax liability to claim the entire credit in one year, you can ‘roll over’ the remaining credits into future years for as long as the tax credit is in effect. However, remember that if you sign a lease or power purchase agreement (PPA) with a solar installer, you are not the owner of the system, and thus you cannot receive the tax credit, the installer receives the credit.
To claim the solar tax credit, claim the solar energy system expenses on your yearly federal tax return. Let your accountant know if you have installed a solar energy system, or if you file your own taxes, there are guides to help you claim your solar ITC. One is offered on the EnergySage’s website.
It pays to shop around. A report by the U.S. Dept. of Energy’s National Renewable Energy Laboratory recommended that homeowners can save when getting quotes from several installers. Include local installers in the mix along with large installers of solar systems. Also, compare your equipment options with these installers. Not all solar panels are alike. Some have higher efficiency ratings. EnergySage states, “The only way to find the “sweet spot” for your property is to evaluate quotes with varying equipment and financing offers. EnergySage offers a “Solar Calculator” that “offers up front cost and long-term savings estimates based on your location and roof type.” The site also offers an online tool to get quotes from local contractors.
For maximum savings through federal tax credits on a new solar energy system for your home or commercial business, cash in of tax credits before the end of 2019.
This information was gleaned from the EnergySage website at: https://news.energysage.com/congress-extends-the-solar-tax-credit .
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