SOLAR TAX CREDIT – WHAT IS IT? AM I ELIGIBLE?
The solar investment tax credit was initiated by the Energy Policy Act of 2005. This program was set to expire back in 2007. However, due to the renewable power demand and the popularity of the program it was extended through 2021. Despite the continuation of this program, the terms have changed and it’s gone down from 30% to 26% with a sliding scale over the next few years. The terms of the credit appear to differentiate from year to year.
How it works: the US federal government subsidizes the solar purchase and installation of solar power generating systems with a general federal solar tax credit. The renewable energy tax credit is available to both residential homeowners and commercial businesses. The ITC will also decrease significantly the payback time on your solar power investment.
How much is the Federal Solar Tax Credit?
Right now through 2020, the tax credit is and will remain at 26% of the solar panel and installation expense. For 2021, the credit will reduce from 26% to 22%. After 2021 the residential solar tax credit is slated to fully expire and only a smaller 10% credit will be available for commercial solar energy systems. To read more about the renewable energy tax credit visit this link.
Am I Eligible for the Federal Tax Credit?
Eligibility for the solar tax credit is fairly simple, but there are a few things you should look out for.
You will need to be the owner and the buyer of the solar system you are installing to be eligible. Thus, solar panels must be installed on your own and live in between January 1, 2009, and December 31, 2021. Rentals do not qualify, but second homes do. If you lease the solar panel system through your solar installer, you are not eligible for the federal tax credit. Businesses satisfy the eligibility requirements for the tax credit if they develop, install, or finance the solar system.
Often the credit is larger than the tax liability of the purchaser. If you have little to no federal tax liability, you will be unable to fully take advantage of this tax credit.
How to apply for the Solar Tax Credit?
File Tax Form 5695 with your tax return. That’s it!
Now is the time to take advantage of the solar investment tax credit. Contact our team of dedicated solar experts at Energy Renovation Center today!
Energy Renovation Center provides high-quality solar panels and installations and we do not lease solar panel systems, as that doesn’t offer the same benefits to our homeowners.
Our team of solar professionals work with you to ensure you satisfy to help you meet the requirements for this valuable federal solar tax credit. We’ll also provide you with a sample federal tax form to make filing a breeze.