TAX INCENTIVES

Investing in solar energy makes more business sense than ever. Financial incentives from the Federal government and States are unprecedented in encouraging companies to invest in alternative energy systems.

By taking advantage of tax credits, grants as well as corporate deductions and exemptions offered by Federal and States governments, businesses AND homeowners can reduce the cost of their investment in a solar thermal system by up to 50%. Federal and State loan programs are also available to help with financing.

TAX INCENTIVES FAQ (from www.SEIA.org) ▾

WHO IS ELIGIBLE FOR THE TAX INCENTIVES? ▾
 
HOW DO THE INCENTIVES WORK? ▾
 
CLAIMING YOUR FEDERAL TAX CREDIT ▾
 
CLAIMING YOUR STATE TAX CREDIT (www.DSIREusa.org) ▾

Corporate Deduction

Energy-Efficient Commercial Buildings Tax Deduction

Corporate Depreciation

Modified Accelerated Cost-Recovery System (MACRS) + Bonus Depreciation (2008-2012)

Corporate Exemption

Residential Energy Conservation Subsidy Exclusion (Corporate)

Corporate Tax Credit

Business Energy Investment Tax Credit (ITC)
Energy-Efficient New Homes Tax Credit for Home Builders
Renewable Electricity Production Tax Credit (PTC)

Federal Grant Program

Tribal Energy Program Grant
U.S. Department of Treasury – Renewable Energy Grants
USDA – High Energy Cost Grant Program
USDA – Rural Energy for America Program (REAP) Grants

Federal Loan Program

Clean Renewable Energy Bonds (CREBs)
Energy-Efficient Mortgages
Qualified Energy Conservation Bonds (QECBs)
U.S. Department of Energy – Loan Guarantee Program
USDA – Rural Energy for America Program (REAP) Loan Guarantees


What are the tax incentives for solar thermal systems? 
Businesses are eligible for tax credits for qualified Solar Thermal Systems which provide hot water to
a structure. The credits are available for systems “placed in service” between January 1, 2006 and December 31, 2016.
Note: This is a basic guide to the credit. For more detailed information, go to WWW.SEIA.ORG and download the Guide to Federal Tax Incentives for Solar Energy, or SEIA’s FAQs regarding the new legislation.

The tax credits go to businesses that install solar equipment for their use.
In the case of cooperative apartment buildings owned by a corporation, SEIA states that “if the corporation spends money on installing qualified solar property, each shareholder is allowed to claim residential solar tax credits on his or her share of the spending.”
In the case of condominiums, SEIA reports that when the condominium management association “spends money on installing qualified solar property, each member of the association can claim the residential solar tax credits on his or her share of that spending,” so long as the management association qualifies as a homeowners’ association under the law, and the majority of the units in the condominium are used as dwelling units.

The tax credits are for 30% of the cost of the system. For systems installed before January 1st, 2009, the maximum credit for individuals is $2000 for solar water heating systems. Systems installed after December 31, 2008 are not subject to a cap. To qualify, Solar water heating systems must meet certain criteria as follows:


1 – System must be certified for performance by the Solar Rating Certification Corporation (SRCC) or a comparable entity endorsed by the state government in which the system is located. SRCC is an organization set up by the solar industry to test and certify equipment so purchasers have an independent assessment of system performance.

2 – At least half of the energy used by the system to heat the water must be solar energy. The credit is not available for expenses for swimming pools or hot tubs.
   
What do I have to do to qualify for these incentives?

To qualify, tax payers will need to have evidence regarding:
* the cost of the system (including labor and piping or wiring to connect the system to a home’s plumbing and/or electrical systems),
* when it was placed in service,
* whether the system meets the qualifying criteria discussed above.
30% Investment Tax Credit (ITC)
Any commercial entity which invests in or purchases qualified solar energy property can take credit.
The main applicable paperwork is IRS FORM 3468.

There are also Instructions for Form 3468 HERE. 

Enter information on line 8a of Form 3468.

For a sole proprietorship the tax credit comes back into Form 1040 on line 50.
For corporations it goes onto Form 1120, Schedule J, line 6d; Form 1120-A, Part I, line 4a; Form 1041, Schedule G, line 2c; or the applicable line of your return.

The Federal definition of a qualified solar energy property is:

1. Equipment that uses solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat.
DSIRE is a comprehensive source of information on state, local, utility, and federal incentives and policies that promote renewable energy and energy efficiency. 

Find out what incentives are available in your state on the DSIRE WEBSITE.

Always consult with your tax advisor when considering an investment.