Solar energy is growing, and California is leading the way. More and more Californians each year are installing solar panels on their home, businesses, and rental properties, and the energy cost savings can be substantial.
There can also be substantial tax savings as you may get a tax credit of up to 30% of the cost of buying and installing the panels.
If you are considering putting solar panels on your property, beware that there are many aggressive salespeople who are misrepresenting the tax savings that you may be entitled to. Note the following:
- Leasing solar panels may be the most economical choice for you; however, tax credits are only available if you purchase the panels;
- Roof replacement and repair costs are typically not available for solar credits;
- If you finance the purchase of the solar panels through any of the programs that allow you to make your finance payments through your property taxes, that portion of your property taxes is not deductible as property tax;
- If you install solar panels on your business or rental property, then you may be required to pay back some or all of the tax credits if you sell the property or convert it to personal use within five years of installing the solar panels; and
- If you are an owner of a partnership, LLC, or S corporation that installs solar panels on its property, then you may be able to claim the tax credits on your personal income tax return, but special rules may limit your credit.
There are other tax and nontax considerations regarding whether you should lease or buy your panels or whether you should go with solar at all.
If you have any questions, help is just a phone call away. Contact us to see how this solar credit affects you: rljfinancial.com/contact.