In 2008, there was a limit to the amount of a tax credit available to home owners for a solar installation. That limit was $2000. In 2009, that limit was removed and now there is no limit at all. The IRS will give you a tax credit based on 30% of the net cost of your solar installation (materials and labor). The net cost would be the amount you invested for your system, less any utility company rebates that you may have received.
For example: if you paid $30,000 for solar installation, the IRS will give you a 30% tax credit in the amount of $9,000 (30% of $30,000).
What is a tax credit?
Simple! If you owe the IRS $9,000 in taxes, because of the tax credit from your solar installation, you would NOT pay them that money. It is considered PAID IN FULL.
Simply download Form 5695 from the IRS website and use it to provide the IRS with your solar installation costs and information. You DO NOT send them a copy of your receipt. It is not necessary and IS NOT REQUIRED. Just complete form 5695.
There are just a few stipulations…
- You must owe taxes to benefit from the tax credit.
- You MUST install solar by 12/31/2016 to take advantage of the 30% IRS tax credit. (But why wait with the rising cost of electricity… ouch!) Here’s the GREAT NEWS: As of now, there is NO LIMIT in place by the IRS as to how long you have in order to use up your tax credit, even if it takes you 20 years to do so.
For more information, contact the IRS to speak with a tax specialist. They are extremely helpful and want to take the time to answer any questions you have.
Call the IRS (toll-free) at 800-829-1040, option 1, then option 4. Ask the operator for the Energy and Tax Credit Area, and you will be transferred to a specialist.
Interested in putting solar on your home? You should be. Our work has taken us into numerous homes that we have helped with quality solar installations. We have personally seen meters spinning backwards, bills go from hundreds a month to minus eleven dollars. The technology is quite good now. There are a number of companies that offer solar, and pricing is all over the map. We know what products are good and which ones are, well, not as good – to keep things polite. Contact us if you want some intimate information on solar. We can help and we will help.
DISCLAIMER: Although Fidelity Home Energy went over the contents of this article intimately with actual IRS tax specialists AND verified the information at length with the IRS’s Northern California Media Public Relations Officer, it’s always best to consult your tax professional. The information contained herein is, to the best of our knowledge, completely accurate and within the laws that are in place mandated by the Department of Treasury of the United States of America. Therefore, the information in this article is for educational purposes only.