Hello everyone – Hope you are all enjoying your summer, it has been a real hot one so far. Luckily, we had solar installed some years back so my electricity bill is nearly nothing. Many of you all have already installed solar panels and many of you are still toying with the idea so I wanted to be sure to give you this info on the solar tax credit (ITC or Investment Tax Credit) so you have the tax information you need if you’re pondering this decision as well.
The ITC for solar panels, as it stands right now, will allow you a tax credit for 30% of the cost of installation on all residential and commercial properties. The credit continues in some form indefinitely but with restrictions and decreased benefits. So the following are the basics for the tax credit, this is not to be confused with any possible rebates or discounts offered by the utility companies or the solar companies, just the federal income tax credit.
First, who qualifies? In 2019 the credit will be allowed for:
- All owners of solar panels on both residential and commercial property. While this means if you lease your panels,you don’t qualify. Many times the rebate has been factored into the lease cost – be sure to ask about that.
- The credit is allowed for the owners of the property only, sorry renters, and
- The installation must be completed by December 31, 2019 to get the full 30%.- meaning the year your system is approved to operate not when the panels are placed on your roof.
- By residential property, I am talking about your home (although not necessarily your primary residence), and not residential rental property. However, for rentals you may be able to accelerate the depreciation of the panels.
After 2019 the credit will be reduced as follows:
– For installations in 2020 you will receive a credit of 26% instead of 30%
– For installations in 2021 the credit will be reduced to 22%
– The current law has the residential credit expiring in 2022. The commercial property solar credit will decrease to and remain at 10%.
Since it takes a while with permits, etc I wanted to give you these guidelines because you will want to decide soon to take advantage of the full 30% credit. BUT, if you miss the deadline you will still have two years to get some tax credit so don’t despair!
California and other states offer incentives but does not offer a solar tax credit be sure to ask what state incentives are available when talking to your solar company.
I’ve enjoyed my summer off so far, but its back at it for me so keep coming back, we’ll have more great financial and tax info coming at you in the next months!
We’ll chat again soon!