Homeowner's Guide to the Federal Investment Tax Credit: What You Need to Know
Congress recently passed an omnibus spending bill that contains a tax credit extension of five years for wind and solar power project investments, originally established by the Energy Policy Act of 2005. Hold onto your seats, because the solar market is about to boom.
So what does this mean for homeowners and how do you know if you’re eligible? First, know that converting your home to solar is not only excellent for the environment, but also for your pocketbook. The 30% solar tax credit almost seems too good to be true, but there are definitely some stipulations you need to be aware of before making the jump to solar.
Using leases or PPAs to purchase a solar power system does not count towards an energy property credit. The credit can only be claimed by purchasing the solar power system. Discuss this with your tax professional for further details. Furthermore, the credit is calculated from the net system price. Rebates, installer promotions, and the like must be deducted before a net price is calculated and reported to the IRS. Refer to Form 5659, the IRS Residential Energy Form for more information.
If you want to claim the credit in the current tax year, it’s best to start and end your project in the warmer months of spring and summer to avoid any delays that the inclement weather of fall and winter can present. Using the date that utility interconnection takes places is your safest bet in claiming your date of completed installation and solar energy generation.
The 30% credit will only be available through 2019. After that, the rate drops to 26% in 2020, 22% in 2021, and only 10% in 2022. Act soon to enjoy the maximum benefits of this tax credits.
Contact us today for further information and to see how we can help you claim this credit!