How does the solar tax credit work
Advantages of Renewable Energy
Solar adoption is skyrocketing, thanks to plummeting solar panel prices that enable homeowners to save money and control their electricity costs instead of being at the mercy of increasing utility rates. But it’s not just about you! Going solar also replaces polluting, climate-changing fossil fuels and supports local jobs – 174,000 of them nationwide, according to the Solar Foundation.
In fact, solar power is so good for so many reasons that, as part of the 2009 federal stimulus bill, Uncle Sam extended a federal residential energy tax credit equal to 30% of installation costs to make the decision to go solar even easier. This additional incentive can really take the economics of going solar into “no-brainer” territory for many homeowners.
Of course, you can’t turn your brain off quite yet – there are rules, this is a government program after all! You can check out the IRS page on the residential energy tax credit for all the gory details, but here are the most important things to know:
You need to have your system installed before December 31, 2016 - after that, the credit expires.
If you don’t have sufficient tax liability to take advantage of the full tax credit in the year you install the system, the remainder of the credit carries over to the following year.
You need to own your home – rentals are not eligible.
You need to own your solar energy system – if you lease your system from a third party, they receive the credit instead.
This last point is critical when deciding how to go solar. Some large solar installers offer leasing arrangements, under which they install a solar panel on your roof and sell you the electricity… which, frankly, is kind of like having a miniature utility company living on top of your house! In
addition to missing out on the whole “owning your energy” thing, this also means that the leasing company gets to claim the tax credit. This is one reason why a recent study by the National Renewable Energy Laboratory found that loan-financed solar systems yield up to 30% greater lifetime savings for homeowners compared to leased solar systems.
By contrast, going solar with a loan from Mosaic means homeowners get the best of both worlds: like a lease, you get low monthly payments instead of a big up-front cost for your solar installation, but you also get to keep the full benefit of your 30% tax credit. In fact, Mosaic has designed its loan to work in tandem with the tax credit: if you make a downpayment on your loan equal to 30% of total costs within the first 18 months, you can lock in a lower interest rate and monthly payments for the duration of your loan! Not coincidentally, that 30% is exactly how much you’ll save on your taxes by going solar, so it’s easy to use that money from Uncle Sam to make sure you maximize your savings in the long term.
Just like leasing a car or renting an apartment, solar leasing can clearly make sense for some consumers. But if you’re looking to maximize your value and control your costs, it’s almost always better to own – and the rules for the federal solar tax credit only make that truism even more true. To get a better sense of what solar could mean for your bottom line, click here to get a free solar loan quote from Mosaic.
. And, not to sound too much like a car salesman, but you really should act now if you want to pad your bottom line with that sweet, sweet tax credit before it expires at the end of 2016.Source: joinmosaic.com