With Tax Day looming, let’s talk about one of the key benefits of owning a residential solar system: the Federal Investment Tax Credit (ITC). The Federal ITC for residential solar systems is an integral way for owners to lower the overall cost of the system and increase return on investment. In exchange for purchasing a qualifying residential solar system and making a commitment to renewable energy, homeowners can receive a tax credit against their federal tax liability.
When considering solar purchase options, it’s important to realize the Federal ITC can only be claimed by the owner of the solar system. Homeowners who engage in solar leases and power purchase agreements (PPAs) cannot claim the federal tax credit. In these instances, the credit goes to the leasing company, who may or may not pass it along to the owner via lower prices or additional services.
The Federal Solar ITC is calculated as 30% of qualifying costs, and SunPower has certified that our solar panels meet the criteria for qualifying solar property eligible for the Solar ITC. In addition, many US states offer incentives that further reduce the cost of ownership of residential solar systems. The Federal credit was extended through 2016, whereas state benefits can and will expire at different times.
While SunPower certifies that our solar panels meet the definition of qualifying solar property, we cannot warranty a specific individual tax result or outcome. The information provided above is for informational purposes only, and you should consult your individual tax advisor to determine how the Federal Solar ITC might benefit you given your individual facts and circumstances.
Want more information?
These qualified sources can provide more information about the ITC and other financial benefits (federal, state or municipal) associated with a solar purchase:
- Solar Energy Industry Association. As the national trade association for the solar energy industry, SEIA strives to educate the public on solar benefits and issues. Here’s a link to the SEIA page on the Federal ITC: http://www.seia.org/cs/federal_issues/solar_investment_tax_credit
- The Internal Revenue Service. The IRS website contains several resources about residential solar investment tax credits and other benefits associated with energy efficiency investments. Start with this ‘Tax Tip’: http://www.irs.gov/newsroom/article/0,,id=237190,00.html
- Local tax professionals. Tax professionals can provide in-depth guidance on residential solar purchases and Federal ITC eligibility. They are a great resource for any customer planning to purchase solar or other energy efficiency products.