Many homeowners don’t know what a solar power tax credit is. Yes we all know about the two positive effects of converting to solar power in our homes (saving energy and saving the environment); but most homeowners forget the solar power tax credit and how it can save them some additional bucks. From a high level, what is this Federal Tax Credit? How can this Tax Incentive benefit me? What are the requirements in order to receive the Tax Credit?
Let’s envision that you decide to install solar panels in your home. By switching to a system based on solar power, you will be able to knock off about 30% of the cost through a credit on your Federal income tax statement. Keep in mind, not all solar power projects will count towards a tax credit. Let’s take a closer look at what will qualify for a tax credit.
First, installing a solar water heater will make the homeowner eligible for the federal tax credit (about 30% of the cost), if one of the following requirements are met: the water heater must either (a) solely rely on the sun’s heat for energy, or (b) use at least half of the energy from the solar power in combination with conventional energy. Second, by switching to solar panels in order to produce electricity in your home, the homeowner will be entitled to a 30% federal tax credit. In both cases, the solar power energy must be applied to either a primary or secondary home, and the tax credit must be claimed by December 31, 2016.
There are a few things to keep in mind when looking into the solar power tax credit and when filing for that credit. First, it could be easy make a mistake and invest a lot of money on an energy saving project, but not qualify for a tax credit, or you may be partially eligible and not receive a significant amount back from your tax credit. To ensure your receive the most benefits possible, look into obtaining an energy efficiency audit before moving forward with your project. Second, keep in mind that Rental Properties do not qualify for this tax credit, only existing homes and new construction are eligible. Third, make sure you save copies of all of your documents before sending them in. Keep a detailed list of the steps you took throughout your documentation process.
For a great overview on the solar power tax credit , visit the Government Energy Savers website . This site will provide a summary of the Tax Credit for Energy Efficiency, a list of specific products that are eligible for a tax credit, and steps on how to claim your tax credit. If you are ready to file for your tax credit, visit Residential Energy Credits which will link you directly to the IRS form. Furthermore, there are a few great online resources that will assist the homeowner when trying to figure out all of the associated costs with their project:
Converting to solar energy products in your home will save you both immediate and long term costs. You get to feel good about yourself because you’re helping the environment and good old Uncle Sam will pay for this through a Federal Tax Credit. Remember you need to meet the Fed’s tax credit requirements. So ensure that your system solely uses the sun’s heat or at least half of the energy is produced by the sun. This will cut your energy costs down by about 30%. Now is a great time to get that energy audit on your home. Then go out and find projects that can save energy that qualify for your solar power tax credit!