24 Sep Start harnessing the sun’s energy before tax credits dim
With 2019 fast approaching, and decreasing tax credits on the horizon, now is the time to schedule your free feasibility survey with Cal Solar.
We have all the information you’ll need on solar, including important details on the federal tax credits and special financing. While deadlines are seasons away, booking now to discuss solar options is a smart first step.
Due to the looming tax credit deadline, “It is anticipated that at the end of next year every solar company is going to be booked out and extremely busy,” said Martin Webb, Commercial Sales Manager with Cal Solar and a solar professional for 20 years. “It’s never too early to start looking at solar and plan for a project next year to beat the rush.” Webb said it is also important to check with your tax professional for clarification on how the credit may apply to you.
Homeowner Jay Schwabe is a proponent of solar and recently had a new home system installed by Cal Solar. “I worked for 36 years for Philips Medical as a field engineer installing CAT scanners and MRI machines, so I have a lot of experience with electrical and mechanical repair,” he said.
Schwabe’s neighbors had solar on their roof and recommended Cal Solar. “I called Rob Totoonchie [Residential Sales Manager] at Cal Solar for a quote,” Schwabe said. “He came out, took shade reports from the roof from four locations and presented a quote a few days later. The entire process was extremely easy and fast. Hint: Let the experts do it!”
“There was a recent IRS ruling stating that commercial installations don’t have to be completed in the calendar year to get that specific calendar year’s higher level of tax credit,” Webb said. “The project just has to have been started – or at least incurred 5 percent of the project cost – in that calendar year to get that year’s higher tax credit … As long as the project is completed before 2024.”
Where the residential tax credit cannot be used: Rentals.
The residential tax credit is only good for homes where the taxpayer lives. It doesn’t have to be the primary residence, so a vacation home or a second home qualifies, but it does have to be a home where the taxpayer lives. So if someone owns a rental home as a landlord and wants to put solar on it, then the residential tax credit cannot be used, since they don’t live there, the tenant does. The only way a property owner can have a rental qualify is if they structure their rental income as an LLC or corporation, and then they claim the 30% commercial tax credit.
Where the commercial tax credit cannot be used: Nonprofits.
No taxes are paid from churches, schools, government buildings, fire stations, parks, and other nonprofits, so the tax credit cannot be captured by those types of groups.
“That’s why there are new financing outfits geared towards helping nonprofits go solar,” Webb said. “[The finance company] will own the system for the first few years, capture all the tax benefits, and then pass some of them through to the nonprofit in the form of lower monthly payments. After six years, the lender has exhausted all the tax benefits, so at that point they turn full system ownership over to the nonprofit.
“So nonprofits can now get some of the tax credit value that they used to have to pass up, by letting someone else own the system for the first few years,” Webb explains. “It’s like lease-to-own in a way. Most of our recent commercial jobs have been nonprofits – churches, fire departments, public parks – where a third party gets the tax credit and shares that savings with the nonprofit. Whether commercial, nonprofit, or residential, with our special financing you can still capture that value somehow.”
Clean and green
Solar is clean energy, and most solar loan payments are lower than your PG&E bill. With the current 30% tax credit and $0-down financing, you can now free up the extra money that you typically send to an out-of-town energy company.
Schwabe received an email from PG&E on July 17, 2017 allowing him to turn on his solar system and start producing electricity.
“Exactly 13 months later, August 17, we reached a milestone when the production of electricity reached 10,000 kilowatt-hours,” Schwabe said. “More than I expected, but pleasantly surprised. Rob had predicted about 8,500 kWh in one year and we produced almost 8,900 kWh. As it turned out, we had a very small surplus, and after 365 days, our PG&E bill was minus $30. Pretty cool to get money back after one year.”
Get a quote from Cal Solar today to take advantage of the tax credit.
Tax Credits By The Numbers
Residential Federal Tax Credit, By Year
For solar electric or solar water heating systems:
– 30% for systems “placed in service by” 12/31/2019
– 26% for systems “placed in service by” 12/31/2020
– 22% for systems “placed in service by” 12/31/2021
– No residential tax credit after 2021
Note: Home being served by solar does not have to be your primary residence.
Commercial Federal Tax Credit, By Year
For solar electric or solar water heating systems:
– 30% if “starting construction by” 12/31/2019 and system “placed in service by” 12/31/23
– 26% if “starting construction by” 12/31/2020 and system “placed in service by” 12/31/23
– 22% if “starting construction by” 12/31/2021 and system “placed in service by” 12/31/23
– 10% for systems “starting construction after” 2021
Note: Excess commercial tax credit value can be carried forward 20 years.