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Can You Write Off Solar Panels on Your Taxes?

Installing solar panels comes with many benefits, one of them being that you can start saving money on electricity almost right away. Yes, solar panels can dramatically reduce your monthly energy costs, starting on day one.

But the savings don’t just stop there. Not only do solar panels reduce energy costs, but they will also give you a tax credit on your taxes come spring.

So, does this mean that you are writing off your solar panels on your taxes? How does the federal solar tax credit work? Let’s dive in!

How Does the Federal Solar Tax Credit Work?

The federal solar tax credit is known formally as the Investment Tax Credit (ITC) and is part of a congressional effort to encourage the adoption of solar panels throughout the United States.

Originally enacted in 2006, there have been many changes to the ITC in the last few years. Until 2019, homeowners received a 30% tax credit if they installed a solar panel system. The tax credit dropped to 26% in 2020 and will decrease until the program is eliminated in 2024.

To qualify, you must:

• Own the solar system. It cannot be leased
• Install new solar panels and equipment. Used systems do not qualify for the ITC
• Have the system installed on your primary or secondary residence located in the USA
• Or install the solar panels at an off-site community solar project that you are participating in

The best part of the ITC is that the tax credit covers the total cost of your solar panel installation. This can include:

• The solar equipment
• Solar consultant fees
• Installation fees
• Electrician fees
• Engineering fees
• Permitting
• Wiring
• Freight and shipping costs
• And more!

Further, the federal solar tax credit is not capped at a specific dollar amount. No matter how much you pay for your solar system in 2022, you can claim 26% of the total cost to receive your tax credit.

Tax Deductions Vs. Tax Credits

It is important to note that the ITC is a tax credit, not a tax deduction. What is the difference? Though we aren’t accountants, here is a quick explanation:

• A tax deduction refers to a portion of your income that is exempt from income tax if you meet certain requirements. Say you spent some of your income on a business expense or it was covered under a deduction allowance. This is a deduction!

• A tax credit is a dollar-for-dollar reduction of the total amount of income tax that you are required to pay.

So say your total tax bill is $15,000 but you earn a federal solar tax credit of $5,000 for installing solar on your property. You can reduce the amount of $5,000 off your tax bill and you’d owe $10,000 for the year instead. But this is mainly hypothetical, make sure to discuss your specific tax situation with a licensed tax professional as your situation might be more complicated. 

Bottom line? Tax credits generally offer more tax savings than tax deductions.

2022 Is the Year to Go Solar

Nothing lasts forever, and that includes the federal solar tax credit. If you want to install solar energy in your home, 2022 is the last year to enjoy the 26% benefits under the ITC.

Starting in 2023, the ITC will drop to 22% and it will then be eliminated in 2024 unless Congress extends it again.

Take Advantage of Solar when Filing Taxes

There are many benefits of going solar, and the ITC is just one of them! Take advantage of the solar tax credit and go solar with Solar Bear Orlando this year before the ITC drops to 22% next year!

Ready to get started with solar? Call Solar Bear Orlando today for a quote; (727) 471-7442!

What Are Solar Panels Made Of & How Are They Made?

At Solar Bear of Tampa, we are always trying to help our customers beat the heat. Since the beginning of time, humans have relied on the might of the sun for survival. Fast forward to 1954, when the world’s first silicon photovoltaic cell was created to fully harness the sun’s power. This foundational invention set the stage for solar panel technology. Let’s take a look at the ground-breaking revolution that has changed the way we use this renewable resource.

Think of a solar panel as an onion. Tons of layers work together to create the ultimate masterpiece (that might give the onion too much credit but go with it). Within a solar panel’s makeup, you will find several components like aluminum framing, tempered glass, solar cells, EVA film (or highly transparent plastic), a back sheet, and a junction box. Each layer is critical for protecting solar cells from weather elements and dirt. This specific combination has been perfected over the last 60 years and now allows for the highest and most efficient energy production for the longest period.

Creating the solar panel can be a rigorous and complex process so we’ve created a shortened version. At its core, the solar panel’s design revolves around the most essential component, solar cells. To do this, solar panel manufacturers use quartz sand to extract pure silicon that will become solar cells. By exposing the sand to a very high temperature, the impurities are burned away, leaving large silicon rocks. Manufacturers then melt them down into cylindrical blocks and add Boron to give them a positive electrical polarity. Melting allows the silicon atoms to align in a desired structure and orientation. From there, the cylinders are cut into paper-thin disks or wafers, creating a shiny surface. To mitigate reflection and maximize sunlight absorption, each wafer is soaked in an anti-reflective coating before the next phase. Metal conductors are then added to each wafer in a grid-like form. These new solar cells are heated, and Phosphorus is diffused over them to ensure they carry a negative electrical orientation. This makes a positive-negative junction between the surface and contents of the cell. After that, the solar cells are linked together to form 48, 60, or 72 cell panels. Manufacturers add a protective layering of a back sheet, EVA film, tempered glass, and an aluminum frame. The junction box is then added to connect the panel to the module, allowing electricity to flow from the panel to the home.

Before solar panels are shipped to companies like Solar Bear of Tampa and homes, each panel is tested to ensure accuracy. After two more inspections, the solar panels are cleaned and then shipped out.

Quite a thorough way to beat the heat while earning financial benefits! If you are ready to learn more about adding solar panels to your home, get your free estimate here or call us at (727) 471-7442 for more information.

Can You Claim the Solar Tax Credit Twice?

When you install a solar panel system, you can take advantage of the Federal Investment Tax Credit, also called the Solar Tax credit which allows you to deduct 26% of the cost of your solar installation from your federal taxes come tax time.

This credit offsets the cost of installing residential solar, but can you claim the solar tax credit twice? Our team at Solar Bear Orlando explains.

How Does the Solar Tax Credit Work?

You can claim the federal solar tax credit for money that you paid towards your solar installation. It reduces the amount that you owe when you file your yearly federal tax return.

The Solar Investment Tax Credit can be filed once for the tax year in which you install your system. The credit that you receive is calculated dollar-by-dollar as a reduction of your federal tax liability. So, if you have 1,200 credits, you will owe $1,200 less in taxes.

Take note: This tax credit is different from a tax refund. To claim the tax credit, you must owe taxes to the government. The tax credit essentially cancels out some or all the amount you owe. If you have already had those taxes deducted from your paycheck, you can get the money back in the form of a refund, but you are only getting back the money that you have already paid.

Solar Tax Credit Eligibility Requirements

The Solar Tax Credit is only available for property owners in the United States whose solar installations meet the specified requirements in the policy. Here are some of the mandatory conditions that your system needs to satisfy to be eligible:

• The solar system should be brand new and should have been installed no earlier than January 1st, 2006, and no later than December 31st, 2023. Unless Congress renews it, the Solar Tax Credit will expire in 2024.
• The system must be owned by you and not leased.
• The property must be in the United States
• For residential solar installations, the location of the system must be at your primary or secondary residence or a community solar project.

The Value of the Solar Tax Credit

As of 2022, the Solar Tax Credit is 26%. When the tax credit was first introduced it covered 30% of the cost of installing a solar system. It remained at that rate until 2019.

In 2015, Congress voted to phase out the tax credit, and beginning in 2020, the tax credit was reduced from 30% to 26%. The rate was scheduled to drop from 26% to 22% in 2021. But when the COVID relief bill passed, it included a two-year extension of the Solar Tax Credit.

The 26% rate is available for the rest of 2022 and will drop to 22% in 2023. In 2024, the federal tax credit is supposed to expire unless it is renewed.

• 26%: Solar systems that are completed in 2022
• 22%: Solar systems that are completed in 2023
• 0% Solar systems that are completed in 2024 and beyond

There is a chance that Congress could vote to extend the Solar Tax Credit, but for now, we recommend that if you are interested in installing solar, you should have it done as soon as possible so you can take advantage of the solar tax credit.

Can You Claim the Solar Tax Credit Twice?

Now, the answer that you have been waiting for. You can only claim the Solar Tax Credit once for your solar panel installation. However, you can roll over any leftover tax credit balance to the following year for up to five years. And if you own more than one home, you may be able to claim separate tax credits for solar installations on those homes.

We advise you to speak to a tax professional about any specific Solar Tax Credit questions, as every situation is unique.

Learn More> Why Florida is the Perfect Place to Switch to Solar

Solar Bear Orlando

If you are ready to take advantage of the Solar Tax Credit before it expires in 2024, call our team at Solar Bear Orlando for expert solar installations throughout Central Florida and the Greater Orlando area.

Go Solar today! Call Solar Bear for an installation quote; (727) 471-7442!

Is It Worth Installing Solar on a Rental Property?

As a landlord, you are likely on the lookout for new ways to increase the profitability of your rental property, and solar panels are a great way to do it!

It can be incredibly worth it to install solar panels on a rental property, and our team at Solar Bear Orlando explains why and how to do it! Ready? Let’s go!

How Can Rental Properties Benefit from Going Solar?

Installing solar panels on a rental property can certainly attract better tenants and can help save on utility expenses in the long run.

Here are some of the main benefits of going solar:

• Help tenants reduce or eliminate their eclectic bills (What a perk!)
• Reduce operating costs if your tenant’s electricity is included in their rental payment
• Offset electricity costs in common areas
• Justify higher monthly rent for tenants
• Lower your rental’s carbon footprint
• Attract higher quality tenants
• Increase the value of your property
• Quality for solar incentives and tax credits

Let’s discuss some of these further!

Tax Credits

If you have a solar system on your investment property, you may qualify for the Investment Tax Credit or ITC and other federal or state tax benefits

Increase Property Value

A great benefit of having solar panels on a rental or investment property is that they increase the overall property value. You may find that you can charge higher rent or find better tenants by having an energy-efficient feature at your rental. In turn, your tenants will benefit as they may see a dramatic decrease in their energy bills. It’s a win-win!

Being able to charge higher rent allows you to financially recover from the expense of installing a solar system. If you sell the rental property later, the solar system will increase its sale price and make it more attractive to potential buyers.

Energy Efficiency

It is amazing to be independent of public utilities. Not only is solar more reliable and better for the environment, but it can also amount to greater savings each year. This is especially true in states like Florida where we get a lot of sun exposure!

Environmentally Friendly

Besides the financial benefits, a solar panel system can decrease our dependence on fossil fuels for energy. Using solar power significantly decreases your carbon footprint and helps the environment thrive for future generations.

Is Your Rental Property Suitable for Solar Panels?

As a property owner, you must consider if your property is right for solar before beginning installation. Most properties in Florida are suitable due to the amount of sunlight we receive here in the Sunshine State, but there are still many factors to consider.

To gain the most benefit from a solar system, the solar panels should be installed on a roof that faces south at a 30-degree angle. Don’t worry, roofs that face east or west at a different angle will still generate sufficient energy! If you have a flat roof, we will have to create the most efficient angle with special mounting brackets.

For properties that face north or have trees and structures that surround them, it can be difficult to generate solar power.

The Costs of Installing Solar on a Rental Property

Keep in mind that before you can reap all the benefits of solar, there are some maintenance costs associated with solar panels.

• You will have to pay a monthly connection fee to your utility company which can be around $20-40 a month
• If you finance your solar panels, then the monthly payment will need to be factored into the rent of your property. As stated above, you can justify higher rent with solar panels, and once they are paid off you will receive a substantial cash flow from your rental property.

Install Solar at Your Investment Property

Take advantage of the solar revolution and install solar panels at your rental or investment property with Solar Bear Orlando today! You’ll gain energy independence, and higher property values, plus you can net higher rent payments from your tenants. Yes!

Choose to go solar with Florida’s #1 solar installation company, Solar Bear Orlando! Give us a call for a solar consultation today; (727) 471-7442!