How the Federal Solar Tax Credit Works and What You Need to Know

solar tax credit 2019

Solar energy not only helps save the planet, but it can also help you save money!

Did you know that once you install solar panels on your home, you’re eligible to claim a third of your total setup costs on your tax return? For anyone who’s on the fence about switching to solar from traditional power grids, reaping the benefits from the Federal Solar Tax Credit could be just the thing to sway your decision. 

Here’s what you need to know in order to do it right: 

Understanding the Federal Solar Tax Credit

As mentioned above, the Federal Solar Tax Credit (or the Investment Tax Credit) allows you to claim 30% of your total solar installation, licenses, and equipment costs on your Federal tax return. 

This means that if you wind up spending $15,000 altogether on your new solar system, you’ll essentially save $5,000 on your taxes the next year. In fact, research shows that the average solar shopper in 2019 saves around $5,000 just by switching to solar and taking advantage of the current program.

This opportunity was originally introduced in 2016, and Congress has since extended the tax credit to 2022 for homeowners to take advantage of in hopes to promote sustainable energy consumption. However, this deal won’t be around for long.  

How the Federal Solar Tax Credit Will Change Over the Years

Unfortunately, the Federal Solar Tax Credit only has a lifespan of 5 years. Not to mention, its value depreciates the longer you wait. 

The amount that you can deduct from your following year’s taxes becomes less and less with each passing year. Here’s a quick breakdown of the payout differences:

  • 2019: If you purchase solar panels within the year, you can enjoy the full 30% tax credit on your entire system installation. Now is the time to buy since 2019 is more than halfway through!
  • 2020: Anyone who makes the change to solar energy can enjoy a 26% tax credit off their total cost.
  • 2021: A little late to the game, but homeowners and commercial business owners can still claim a 22% tax credit on their solar panel system from Uncle Sam. 
  • 2022 and beyond: At this point, only commercial solar energy buyers can claim a modest 10% tax credit on their solar setups. Residential homeowners are out of luck. 

Although the deal starts to wither, the U.S government does give buyers a little breathing room to get the job done and reap the rewards. For instance, changes to the program have made it so that people can claim the tax credit immediately after construction and installation is finished. The only catch is that solar systems have to be fully operational by the end of 2023. 

Knowing if You’re Eligible for the Federal Solar Tax Credit

Combing through all this information concerning timeframes and percentages may seem a bit overwhelming, but knowing if you’re eligible for the Federal Solar Tax Credit and claiming benefits is pretty straightforward. 

Essentially, the only stipulation that determines your eligibility for the Investment Tax Credit is whether or not you own your solar system outright. This means that, if you happen to lease your solar systems through a solar energy provider, you do not own the equipment. Therefore, you’re not eligible for any kind of tax credit. 

On the other hand, if you do own your system, great! Claiming your solar tax credit is as easy as informing your year-end accountant about your purchase and giving them the proof, or if you use a virtual tax filer (TurboTax, H&R Block), you can simply plug in the credit and watch your savings roll in. 

Working with a Solar Professional Can Help

Whether you’ve already made a solar system purchase or you’re considering taking the plunge, working with a solar professional can help make the process a lot easier. 

For those with a setup in place, don’t hesitate to reach out to your provider to ask questions and gain valuable insights so that you can get the most out of your energy plan. From product issues to general questions, an expert-level solar provider should assist you with any problems so that you can live a better life with a sustainable peace of mind. That being said, if solar energy is new to you, then feel free to contact a professional at SolarTime USA to learn more. 

Their mission is to always put the customer first. Serving over 21,000 families and businesses throughout the U.S. and Europe, you can trust that your solar needs will be met with the utmost care, and most of all, the greatest affordability. 

Reaping the benefits of the Federal Solar Tax Credit is just one aspect of how solar energy can benefit your home, so visit SolarTime USA today and start making a difference for the future.

 

How do solar panels affect the value of my home?

solar panel appraisal value

Do you know about solar panel appraisal value and how it can increase your selling price and decrease your bills?

You might not be moving and selling yet, but it’s worth to be aware of what value your home could gain with solar panels installation added to it. In this blog post, we will explain how solar panel impacts your appraisal value.

Solar Panel Appraisal Value

According to the study by the Lawrence Berkeley National Laboratory, people who are looking for a new home have been willing to pay more for a property with the solar system already installed. The study examined about 23,000 home sales during 13 years of home sale data. The findings showed that homes with solar panel installation are more expensive by an average of $4/Watt more than homes without solar panels.

Cash Purchase

Customers who purchase solar panels with cash are fully owning their system. In this case, a system is considered as a part of the property and it raises the value of the house.

Financing

Financing your solar panel installation through a loan that has since been paid in full means that you are now the owner of the system. If your solar panel system is financed via an unpaid loan, you are obliged to make monthly payments to cover your debt, ownership depends on the contract signed with the lender. Selling your home with the solar loan increases the value of your property and thanks to the additional revenue you may pay off the loan. In some instances, you may also choose to pass on the solar loan to the new home-buyer, without increasing the sale value.

Lease

Leasing the solar panels allows the homeowners to pay for the right to use the solar system for a defined period of time, but they are not the owners of the system. The system belongs to the solar provider. When you are ready to sell your home you can pay the rest of your lease and sell the solar system to the new homeowner. There is also a possibility to transfer the lease to the buyer, provided that the new property owner wants to take over the lease.

How Solartime Can Help

We are aware that installing solar panels is a long-term investment so we want to make it more simple and straightforward for all families.  If you decide to sell your home with a solar loan, we can help you transfer it to the new homeowner. We can also assist you in moving your solar panels to your new home. We are here to help you in the best way we could.

Should you have any further questions about this, do not hesitate to contact us at 972 675 7725 or office@solartimeusa.com