If you are on the fence about getting a solar energy system installed on your home, these tax incentives may just give you the extra boost you need to make the decision to go solar.
Federal Solar Tax Credit
You can receive 30% of your solar installation cost back as a tax credit from the federal government.
Although you should consult a tax expert so you thoroughly understand the incentive, a simple overview of it is:
- You get a solar energy system installed on your home.
- You file a copy of IRS form No. 5695.
- The IRS credits you 30% of the cost toward your tax bill.
Using some numbers, if you paid $15,000 for your installation, you are due to receive $4,500 in tax credit. So, if your tax bill is $8,000, with the Federal Solar Tax Credit, you would only be paying $3,500 in taxes for that year.
Also, the credit rolls over to your next tax bill if your current tax bill isn’t as much as the credit. So, if you are due to receive $4,500 in Solar Credit, but your tax bill is only $2,500, the remaining $2,000 will be put toward your next tax bill.
The scheme ends in 2016 (unless it is extended), so you need to act quickly to get the tax credit.
California Tax Incentives
In California, if you have solar panels installed on your home, the value they add to your home ($20 for every $1 you save annually on power) is legally excluded from any valuation of your home for property tax purposes.
In San Diego, you can also sell surplus energy back to the power grid. The energy company will either credit you at the current rate against future bills or they will send you a check annually.