Residential Solar has been booming for years as more and more homeowners think about saving money on their electricity bill and also being more conscious of the impact that they have on the environment. With solar, there are immediate benefits in the form of lowered energy costs and peace of mind since you do not have to rely solely on the electrical grid for power. There are also some delayed benefits which come in the form of federal tax breaks. Tax breaks are offered to homeowners because solar energy not only protects the environment but it also pushes your excess power back into the electrical grid. This scenario virtually makes it a win-win for both you and your city. Keep reading below as we go into detail about one very important tax break coming your way in 2020.
This tax credit is the biggest incentive offered to homeowners looking to go solar in the next 1 - 2 years. The tax credit, also known as the investment tax credit or ITC allows you to deduct 26% of the cost of installing both a residential or commercial solar energy system. The best news about this credit is that it does not employ a value cap, meaning whatever money you spent on that solar energy system will still be eligible for a tax write off.
The ITC was created back in 2005 as part of the Energy Policy Act of 2005 and had an expiration date set just two years later in 2007. With a series of successful extensions pushed through Congress, we will continue to enjoy the ITC through 2021. In a new rule established recently, you can also claim the 26% credit as soon as the construction on your new system is completed, not when it is operational. The 26% write off will only continue through December 31st, 2020. After that date, the credit will still be usable, but the percentage you can write off your taxes will gradually step down over the remainder of the extension.
Qualifying for the tax credit is pretty straightforward, as long as you own and have installed a solar energy system for your home or business you are qualified for the tax credit. It’s important to note that if you plan on using this tax credit that you need to take ownership of your solar system. If you are leasing or financing the system in some way then, unfortunately, you cannot take full advantage of the tax credit. When working to make use of this credit with your tax professional make sure that you have saved all of the pertinent documents relating to the install.
If you are confused about federal regulations and some of the above information didn’t make sense there is absolutely no need to worry. Our team here at Triton Solar’s main priority is for you to be excited about the future of solar energy for your home. Schedule a consultation today for an in-depth analysis of your property and quotes for the various systems we can install.