Solar Tax Incentives 2019 – Last Year Before Government Incentive Reduction
Back in 2015, the next year’s spending bill was approved, and this was great news for solar companies and homeowners alike. Why? Because the solar panel tax credit had been extended. However, in 2019, we’re now coming to the end of the biggest solar incentive. If you want to invest in solar panels and enjoy tax credit for the purchase, we recommend getting started NOW.
Solar Tax Credit – Incoming Reductions
For those who don’t know, 30% of the solar energy system installation costs can be deducted from federal taxes thanks to the investment tax credit (ITC) scheme. Regardless of whether you invest for a commercial property or a home, it allows savings in the thousands since there’s no cap on the value.
Sadly, the 2016 extension was designed for just three years…which means we’re in the final year before the scheme changes completely. In 2019, you’ll still be able to recuperate 30% of your solar installation costs in the form of a tax credit. Yet, you will lose this opportunity as soon as we head into 2020.
Next year, the amount you can receive will reduce to 26%. Although this may seem like a small jump, it could potentially mean hundreds of dollars. In 2021, it reduces again to 22%. After 2022, those who invest in solar will only be able to deduct 10%; this will only apply to commercial systems, residential systems will have NO deduction opportunities.
As we can see, it’s more important than ever to make a decision regarding solar. If you’re concerned that tax credit can only be claimed when the system is operational, this has now changed. Thanks to recent adjustments to the legislation, claims are possible as soon as the system has been installed; the system will need to be operational by the end of 2023. If you are considering going solar, consider an energy audit on your home first to confirm your home is energy efficient so that you can maximize the savings that solar produces.
Can I Claim?
Luckily, there are no strict requirements in order to qualify for the tax credit scheme. As long as you buy the solar system and have it installed on a commercial or residential property, you can claim. Often, we see people panic that they won’t have enough tax liability to use the tax credits. Don’t worry, you can roll them over into future years; with this in mind, you could enjoy tax reductions for the next three or even five years.
At this point, we should note that you need to be the owner of the solar system. If you lease the solar system or sign a PPA agreement, you won’t benefit from the tax credit because you aren’t the official owner.
If you decide to buy solar panels in 2019 and take advantage of the 30% deduction before it’s too late, we have some advice!
Shop Around – Rather than checking the price of one system from one installer, shop the market and assess ALL of your options.
Bigger Isn’t Always Better – Just because a brand can afford heavy advertising, this doesn’t mean they offer the best service. Recently, a US government report showed that small installers can be between $2,000 and $5,000 cheaper (and the service is just as good!).
Consider All Your Options – There’s no universal ‘solar panel’, and this is something that trips people up. Look at the different styles and varieties (and speak to an expert, if necessary!).
Meet YOUR Needs – It’s all well and good reading recommendations and the experiences of others, but buying solar panels is a personalized experience. When talking to professionals, make sure you buy a system that will meet your needs both now and long into the future.