On a bright, shiny day do you ever gaze longingly at your roof and think, “Wow, I wish I could go solar and take advantage of that. Think about it, Marsha – we’d be living off the Sun’s limitless supply of energy. We wouldn’t have to keep feeding Big Electric. We could cut the cord! We’d be living off the land! We – “
“I don’t think using solar energy to power the tv counts as living off the land, John.”
“Doesn’t it? Think of the benefits – we can save all the money we spend on electricity and put it towards our retirement. I think we might actually get a tax deduction for installing solar equipment. Hey, we should call our tax woman about the solar thing. And retirement. It’s going to be great, Marsha, you’ll see.”
Want to go solar, save the planet and get a tax break? Here’s what you need to know:
You have to own your home and the solar panels installed. You also have to have enough of a Federal Tax liability to qualify to take the deduction. Even if you don’t have enough tax liability to claim the entire credit in one year, you can “roll over” the remaining credits into future years for as long as the tax credit is in effect.
Most importantly: Your residential solar equipment has to be installed and up and running by December 31st, 2019 in order to take advantage of the tax option to deduct 30% of the cost of the system. Even if you miss the December 31st, 2019 deadline, you can still take the deduction in following years, just at a reduced percentage (see table below):
- 2019: This is the last year the tax credit remains at 30% of the cost of the system.
- 2020: Owners of new residential solar can deduct 26% of the cost of the system from their taxes.
- 2021: Owners of new residential solar can deduct 22% of the cost of the system from their taxes.
- 2022 onwards: There is no federal credit for residential solar energy systems.
So if you’re the type of person who wants to save money and the planet and watch your meter do that thing where it runs backwards, check out your solar options. But beware: Vendors of solar equipment do not always have the correct information; sometimes, they might unwittingly provide you with qualifications for the solar credit for business owners and not the individual. Also, a conscientious solar vendor will tell you up front that unless they’ve begun the work in September at the latest, there’s no way you’ll be up in running by the year-end deadline. This deduction is available to individuals and businesses, although different specifications apply.
When in doubt, we are here to help!
To find out what happens to John and Marsha, click here.