Solar Tax Incentive
If you lease a solar system, it’s important to note that the Federal Solar Tax Credit goes to the system owner – not the lessee! This is a crucial consideration to make before you lease, ensuring you are fully aware of what you are giving up.
How the Solar Tax Incentive Works
Your solar system will qualify for the Federal Solar Tax Credit, a significant solar tax incentive of 30% of the cost of the system through 2032. This is the largest, non-income limited tax credit you can get, offering substantial financial benefits.
The home served by this system does not have to be the taxpayer’s principal residence. You may be able to claim a Federal Solar Tax Credit for a second home you live in part-time and don’t rent to others.
It’s not a tax deduction. It’s better. Tax credits reduce how much you owe in taxes Dollar-for-Dollar.
You can carry over unused Federal Solar Tax Credits to future tax years, providing a flexible and convenient way to manage your tax benefits.
How to Claim the Credit
You must include Form 5695, Residential Energy Credits, with your tax return to claim the credit. Remember, you must claim the credit for the tax year when the property is installed, not merely when it’s purchased.
Always seek professional tax advice before you decide on solar power. We are NOT tax planners, accountants, or CPAs.
For an in-depth explanation with examples, click here.