Tax day is just around the corner, and, like most of us, you’re probably scrambling to get everything ready. There is, however, a bright spot in all the anxiety and dread for some people. And that is the healthy tax breaks that come with solar-energy improvements – at local, state, and federal levels. So whether you’re buyer or seller, here’s how solar energy can impact your taxes in Richmond . . . for the better.
Federal Tax Credit
While the initial cost of solar installation may seem frighteningly large, it will pay for itself and then begin saving you money in the long run. And there are tax credits to help offset that initial expense, particularly the federal tax credit.
The Environmental Protection Agency (EPA) and the Department of Energy “offer tax credits for solar-powered systems. The solar Investment Tax Credit (ITC) incentivizes Americans to adopt solar energy, driving the growth of the solar industry. It applies to owners of residential and commercial properties that have solar panel installation.”
Solar energy can impact your taxes in Richmond because with this incentive you can get “a federal tax credit of up to 30% of the total cost” of installation. This means, for example, that ” a solar power system that costs $25,000 may be eligible for a $7,500 federal tax credit.” Keep in mind that this tax credit will be reduced in coming years (and may end after that), so the time to install a solar system is now.
State and Local Rebates
Solar energy can impact your taxes positively with the state and local rebates. And they’re not just for installation, so this is something buyers should be aware of and sellers should use in marketing. (Contact your local agent to find out how to leverage these rebates. To discover more, call 8043878734.)
These rebates vary from state to state and from municipality to municipality, but a good starting point to find out more is the Database of State Incentives for Renewables & Efficiency. California, for example, offered cash incentives (now expired, though) on solar systems for customers of certain power companies. Again, consult your local agent to find out what’s offered in Richmond.
Residential Energy Property Credits
Tax implications also go beyond how solar energy can impact your taxes in Richmond. There are also tax breaks for energy-efficiency improvements. You can get tax breaks not only for installing solar systems, but also for, say, installing energy-efficient windows, doors, skylights, and appliances, as well as for such things as adding insulation.
Look at it this way. You get a tax break for installing solar, and then you get tax credits for installing energy-efficient appliances that your solar panels can power. Whether you’re buying or selling, this adds up to an attractive situation both financially and environmentally.
“Installing alternative energy equipment,” according to experts in this industry, “can also count toward the residential efficiency property credit. A solar water heater and small wind turbines are examples of appliances that qualify. To note, there can be limits to these credits depending on the type of alternative energy improvement.”
More on the Solar Tax Credit
When talking about how solar energy can impact your taxes in Richmond, we should certainly spend more time on the federal solar tax credit. It was approved in2015 and implemented in 2016 to make solar energy more affordable for Americans.
But what exactly is this solar tax credit, and what does it mean for the way solar energy can impact your taxes in Richmond?
“The federal solar tax credit, also known as the investment tax credit (ITC), allows you to deduct 26 percent of the cost of installing a solar energy system from your federal taxes. The ITC applies to both residential and commercial systems, and there is no cap on its value. Thanks to the ITC, the average . . . shopper saves thousands of dollars on the cost of going solar in 2020.”
Qualifying for this tax credit is pretty simple: you just have to own the home and the solar energy system. And it gets even better. 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.”
The Win-Win Effect of Solar Energy
Really, everything about this is good – from the impact on taxes to the impact on homeowners’ bank accounts to the environmental impact. Homeowners get tax credits for installing solar systems, which means that reducing their carbon footprint becomes a profitable investment. And the upshot of all that is that on tax day you don’t have as much worry about what you’ll have to pay.
No matter whether you are buying or selling in Richmond, it pays, then, to understand how solar energy can impact your taxes. But you do need to be aware that this is a field constantly in flux. Your local real estate agent, though, can help you stay abreast of the latest developments and what they mean for your real estate goals.