California Solar Tax Credits: Everything You Need To Know!
Being taxed for most of us is something akin to having a root canal. However, if you are living in California and are environmentally conscious, then you should brace yourself to save some money. The federal government in a bid to enact the Emergency Economy Stabilization Act in 2008, offered support for the growth of the renewable energy industry. Solar tax credits and incentives became available to those that are interested in using solar energy for whatever reason. So whether you want to follow your passion for renewable energy or you just want to follow what your friends are doing, solar energy is a good thing.
So what does it cover?
Solar energy is harnessed in two main ways. Photovoltaic cells and solar hot water thermal systems. Owners of residential property qualify for tax credits as long as they have a tax liability and are bent on purchasing their solar systems on their own as opposed to going through third party companies. The tax credits however only cover homes and not rentals. The tax credit may take care of a second home too.
So credits or deductions?
In case you are wondering if there is a difference between a deduction and a tax credit; yes there is. It's true that both have to do with savings from the IRS, but tax credits are much better. Deductions take money off your taxable income which may vary depending on your income. On the contrary, tax credits reduce what you owe the I R S by a specific amount, regardless of your income.
How much credit do you get?
If you are looking to make solar energy more affordable and are requesting a tax credit on your investment, you can get up to 30% (thirty percent ) of the cost of acquisition and installation of your solar panels. This means that you can take 30 % off your net cost of the solar system including the labor costs after discounts, tax incentives and rebates. You have to remember that this is a one-time tax credit. You can either extend it to the next year or backward to the previous years if you haven't finished putting up the infrastructure within the year. You can consult a professional to get more information about IRS policies.
Why you should act now
Whatever your motivation for getting solar panels installed , getting your installation now is the best idea. One of the reasons is because Solar Tax Investment Credit may not be around for a long time. California offers rebate programs and grants to encourage and empower lower-income homeowners to get solar
Once you get into the solar experience, you will encounter the net metering phenomenon that is required by California law. This program enables owners of solar energy systems to sell the excess energy generated by their systems. In return, the customer will receive a credit on the power bill. You may choose when you want to have the net metering credit considered; meaning you can take advantage of it immediately or postpone it to the preceding years.