Save on Solar Panel Install: Incentives and Tax Credits
Setting up solar (photovoltaic) panels on your property is well known as a way to produce inexpensive and clean electric power. You may have been hesitant, though, to install a solar panel system due to its initial cost.
Happily, a number of financial incentives, rebates, and tax credits are being offered that make converting to solar energy both ecologically sustainable and affordable.
Because programs vary according to where you live and which power company you deal with, it is important to check with your local tax consultant to see which of the following apply to your situation. In addition, solar panel installation must conform to the building energy code for your state or region.
Federal Tax Credit
The Residential Renewable Energy Tax Credit is equal to 30 percent of the cost to purchase and install a solar electric system, with no upper limit on the amount. This generous federal tax credit covers the following: complete solar energy packages for new or existing construction, expansion of solar energy systems, solar water heating,and purchase of emergency battery backup which includes a minimum of one solar panel. The credit has been extended until December 31, 2021.
Sales Tax Incentive
Depending on the state, you may receive a sales tax incentive in the form of an exemption from, or a refund of, tax on the purchase of a renewable energy system such as photovoltaic panels. Many states institute a "tax holiday" of one or two days annually, when no tax is to be collected on sales of these systems.
Property Tax Incentive
Property tax incentives vary according to your local authority. As a general guideline, the value added to your home by installing a renewable energy system will not be included in your property tax valuation. (Note that if you install solar panels, you may be able to sell your home at a premium of approximately $5.50 per watt.)
Many utility companies, as well as some state and local governments, will offer a rebate on your electric bill when you install solar panels or other source of renewable energy.
Performance-Based Incentives (PBIs)
Your state might administer a performance-based incentives (aka production-based incentives) program that provides cash payments to the owners of a renewable energy system. However, this type of payment, which is based on the number of kilowatt-hours or BTUs generated by the system, requires that a meter be installed to measure the output.
Property-Assessed Clean Energy (PACE) Financing
The government of your county or city may offer PACE financing of your solar panel purchase. A special assessment will be performed on your property for the purpose of repayment.
Other loan programs may be made available through your utility company or state government to finance renewable energy measures. These involve loans with low or no interest, to be repaid over a maximum period of ten years.
Laura Firszt writes for networx.com.
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