Solar photovoltaic (PV) installations have never been more affordable than they are today.
But with the Solar Investment Tax Credit (ITC), installing PV panels becomes 30% cheaper.
Not surprisingly, the ITC is one of the most popular green incentives in the industry. And it has helped bring solar power within easy financial reach of millions of ordinary homeowners and businesses. Since its introduction in 2006, the investment tax credit has helped the solar industry grow by a staggering 1600%.
But how does this incentive work? And more important, do you qualify?
Understanding the Solar Investment Tax Credit
Under this program, you are allowed to claim a 30% tax credit when you go solar—parts and labor included. A $10,000 installation, for example, reduces your tax payment to the IRS by $3,000.
This means that the true cost of your PV system is now only $7,000.
The solar investment tax credit was originally slated to expire at the end of 2016. But it received a surprise 5-year extension. This is great news because it gives you a little bit of leeway. But depending on where you live, other green incentives may be expiring soon.
So it’s best not to delay your solar investment.
If you decide to move forward, however, will you qualify for this 30% tax credit?
It depends. You must meet the following criteria:
- The installation must be performed by a licensed contractor (licensed within your state). Although DIY jobs technically count, it is much harder to claim “labor” costs. Besides, unlicensed jobs usually disqualify you from other state and local solar incentives—like net metering.
- The credit can only be applied to properties you occupy—i.e. rentals don’t qualify. However, it doesn’t need to be your primary residence or business—a vacation home is okay. But you’ll need to adjust your claim based on the percentage of time spent in these secondary residences. Contact your tax professional if you need assistance.
- If you are a residential solar customer, you need to use IRS Tax Form 5695. Commercial customers need to use IRS Tax Form 3468.
- You must own the PV system. If you finance your installation using a lease or power purchase agreement (PPA), you cannot claim the solar investment tax credit for yourself.
- Your installation must go online before December 31, 2019. After that, the 30% credit moves down to 26% (through 2021) and 22% (through 2022).
Do you meet all of the above? Then there’s a good chance that your installation qualifies.
Let’s get your system installed so that during next year’s tax season, you can be claiming your tax credit! If you have any questions about how going solar may impact your individual tax situation, we recommend that you consult with a tax professional.
In addition to the Solar Investment Tax Credit, you may also be able to take advantage of state-level solar incentives. We work closely with our customers to determine what you’ll qualify for—this level of customized customer service ensures that you receive the lowest possible price once you decide to move forward.
To learn how we can help, contact us today for a no-obligation solar quote.