I'm busy working on my blog posts. Watch this space!
Why Not Go Solar?
March 27, 2017
Not only is solar affordable, but it is saving Americans money. In San Diego, the average monthly savings is $137 per month. In addition to this savings, the state of California exempts solar installation from property tax. Therefore, if you reduce your electricity bill by $1,000, you increase your home’s value by $20,000.
Going solar helps reduce your individual carbon footprint, but it is almost five times more expensive as electricity from coal and other sources. Therefore, to encourage Americans to use solar power, the Environmental Protection Agency and the Department of Energy run the Energy Star program offers tax credits for solar-powered systems.
Installing alternative energy equipment in your home can qualify you for a tax credit equal to 30% of your total cost. This credit is available through the end of 2019. After 2019, the percentage decreases every year and the credit stops at the end of 2021.
Solar-powered units that generate electricity or heat water qualifies as equipment eligible for the tax credit. The credit is only available for improvements you make to your residence. This can apply to a second residence as well.
As a credit, you take the amount directly off your tax payment, rather than as a deduction from your taxable income. Other than the cost of the system, there's no limit to the dollar amount of the credit.
Although you may not claim the credit for installing solar power at rental properties you own. There is exception if you live in the house for part of the year, but use it as a rental when you're away. You have to reduce the credit for a vacation home or rental to reflect the time you're not there. For example, If you live there for three months a year, you can only claim 25% of the credit. If the solar-power system cost $10,000, the 30% tax credit would be $3,000, and you could claim 25% of that, which would $750.
In order to claim the credit, you must file IRS Form 5695 as part of your tax return; you calculate the credit on the form, and then enter the result on your 1040. The federal government allows a 30% deduction of your solar power system costs off your federal taxes through an investment tax credit (ITC)., The federal solar tax credit deduction can be rolled over to the following year, if you do not expect to owe taxes this year. So, why not go solar?