As a homeowner, saving money on monthly bills, home repair costs, and other concerns is always a top priority. From preventative maintenance to tax-deductible upgrades, there are many different ways to help you decrease your yearly expenses and keep more money in the bank.
With energy-efficient upgrades and renewable energy being some of the biggest topics of the past decade, it is no surprise to see tax credits being offered for these types of home improvements. One of the biggest tax credits that you can take advantage of going into the new year is the solar tax credit. This tax credit is available to those who have solar panels professionally installed on their home to help lower their energy bills.
Mr. Roofing, a San Francisco solar and roofing company, is one of California’s leading solar roofing contractors. We can help you explore the benefits of the solar tax credit and how you can claim your incentives with the professional installation of energy-efficient, solar panel roofing. To help you better understand this incentive, let’s take a look at exactly what the solar tax credit is and how to take advantage of its benefits.
What Is The Solar Tax Credit?
The Solar Tax Credit is credit homeowners can receive from having solar panels professionally installed on their home’s rooftop. As of January 1, 2020, the rate will drop from 30% to 26%, however, Mr. Roofing will extend an extra 4% savings to new customers to meet the original 30% rate offered. Not only does this mean you’ll be able to take advantage of money-saving solar panels, you’ll also get a nice tax credit incentive to help recoup some of your investment into newer technology for your home.
How Does The Solar Tax Credit Work?
Solar Tax Credit works similarly to many other renewable energy tax credits—deducting a percentage, (or 30%, according to last year’s plan) of your total energy spending from the amount you owe in taxes. For example, if your solar panel system cost $15,000, your tax credit would have been $4,500 at the 30% rate offered last year. This means that if you had owed $4000 in taxes last year, your debt would be reduced to $0 with the solar tax credit applied—and a $500 credit would be applied to next year's taxes.
What Requirements Are Needed?
Before you make the leap to get solar panels to take advantage of this tax credit, you need to make sure that you meet all of the requirements first. For residential homeowners, you will have to have a solar PV system installed that is providing energy for your home and it will have to be approved and in service. All electrical and fire codes must be met and you must own your PV system. This covers financed or paid in full systems, not leased systems.
How Do I Claim The Credit?
When you want to claim your credit, you will need to complete the IRS form 5965. Find the line stating “Qualified Solar Electric Property Costs” and add in the full amount that your system cost. On line 6, figure the total tax credit by multiplying the total cost by the percentage tax credit you qualify for. Take this number and also enter it on Form 1040 under the “residential energy credits” section. Include the 5695 form when you submit your taxes.
When Is It Too Late?
Each year, the tax credit percentage is decreased, meaning if you plan on installing a solar panel roof system, there is no time like the present. Residents who have a system installed this year from Mr. Roofing can take advantage of a 30% tax credit. Those installing them in 2021 will receive a 22% credit while those waiting until 2022 will only receive a 10% credit. In 2023, this credit will no longer be available to residential solar users.
Solar System Installation In San Francisco
Since 1989, Mr. Roofing has been a trusted roofing company in the San Francisco area. Mr. Roofing provides affordable, stress-free roofing and solar solutions to ensure your home is fully protected from the elements. With a long list of industry awards such as a 2017 “Best Of Houzz” award and a 2018 “Best Business of 2018” award, you can rest assured that your home is in the hands of trusted professionals.For more information about our solar panel installations, roofing systems and repairs, or our other exceptional home services in the Bay Area, give our team a call now. To get a free, in-home consultation and estimate on your solar roofing, just fill out the online form.