For those of you considering installing solar panels on your home in the near future, here is some useful information. As always, if you have any questions about this tax credit – or any tax related issue for that matter – please feel free to contact me anytime.
Credits for approved solar installations
If you install an approved solar-power system before the end of 2016, you can claim 30 percent of the cost as a tax credit for the year you installed it.
As a credit, you take the amount directly off your tax payment, rather than as a deduction from your taxable income. You can claim the credit for your primary residence, a vacation home, and for either an existing structure or new construction. Other than the cost of the system, there’s no limit to the dollar amount of the credit.
Below is the exact wording directly from the IRS.
Residential Energy Efficient Property Credit This tax credit will help individual taxpayers pay for qualified residential alternative energy equipment, such as solar hot water heaters, solar electricity equipment and wind turbines installed on or in connection with their home located in the United States and fuel cell property installed on or in connection with their main home located in the United States. The credit, which runs through 2016, is 30 percent of the cost of qualified property. ARRA removes some of the previously imposed annual maximum dollar limits.
—Written July 3, 2014