We all want affordable and environmentally friendly energy, but for many of us that seems like a pipe dream. Even energy options like solar panels that can save thousands in the long term can require pricey up-front costs for purchasing the system and having it installed. This dichotomy is made even more frustrating by the fact that while cheap panels may save you money up front, the long-term savings are greater with more expensive panels. What many consumers don’t know is that you can purchase and install quality solar panels affordably thanks to incentives like the solar tax credit in 2017.
What is the Solar Tax Credit?
The solar tax credit, or investment tax credit (ITC), was established in 2005 as part of the Energy Policy Act. The solar tax credit allows consumers to deduct 30% of the cost of having a solar energy system installed from their federal taxes, whether that system is residential or commercial and with no cap on the value that can be deducted.
While the ITC was originally supposed to expire at the end of 2007, it was extended through the end of 2016 and again through 2021 for residential solar energy systems and permanently for commercial systems, but with changing rates. Through the end of 2019, tax deductions for both residential and commercial systems will stay at 30%. The deduction will drop to 26% for both residential and commercial systems in 2020 and down to 22% in 2021. From 2022 on, new commercial solar energy systems will be eligible for a 10% deduction, while new residential systems will no longer be eligible for a deduction.
How Can the Solar Tax Credit in 2017 Help Me?
Whether you want to install a solar energy system in your home or are a business owner interested in switching to solar energy, the solar tax credit extension can help make installations more affordable. In fact, the average consumer saved almost $9,000 in 2015. Often, these savings can be paired with credits from your state or municipality, and your energy company may also offer rebates for customers who switch to solar energy systems. Furthermore, even if you don’t have enough tax liability to receive the entire credit in a year, the remainder can be paid out in future years as long as the credit is in effect.
The new extension is particularly helpful because while previously owners of new solar energy systems were not eligible for the tax credit unless their system was operational, now owners of new solar energy systems are eligible for the solar tax credit as soon as construction begins, so long as the new solar energy system is operational by the end of 2023. However, for the most savings it is still important to act quickly, as rebate rates will be dropping soon.
How Do I Become Eligible for the Solar Tax Credit in 2017?
Remember that the solar tax credit is only available to owners of new solar energy systems, so you are not eligible for the credit if you sign a lease or PPA with a solar installer because you will not be the owner of the solar energy system. Leasing a solar energy system is also more expensive in the long term than purchasing a solar energy system, especially when the solar tax credit is taken into account, so buying yourself a new solar energy system is definitely the better choice.
How Do I Claim the Solar Tax Credit in 2017?
Claiming the solar tax credit is easy. You’ll need to do it when you file your yearly federal tax return. Simply let your accountant know that you’ve had a new solar energy system installed in the past year or, if you file your own taxes, use this easy step-by-step guide.
Getting Professional Help with Your Installation
Installing solar panels can save you money, but it can also be stressful. With help from the right professionals, however, it doesn’t need to be. Preman Roofing is a premier roofing company that has been locally owned and servicing San Diego and the surrounding areas since 1999. In additional to more traditionally commercial and residential roofing services, Preman Roofing now also offers rooftop solar panel installation. Contact us today to find out why our customers are thrilled with their decision to choose Preman Roofing!