Taxes are on people’s mind this month and some homeowners are wondering what the tax breaks are for investing in residential solar power or other renewable energy projects. Part of the American Recovery and Reinvestment Act passed last year offers financial benefits for property owners who invest in renewable energy.
If you purchase a solar energy system for your home, you may be eligible for a federal tax credit. The federal Residential Renewable Energy Tax Credit extends to Dec. 31, 2016. It covers 30% of cost with no upper limit, including installation. Existing homes and new construction qualify. Principal residences and second homes qualify. Rentals do not qualify. Tax credits apply to both solar water heater and photovoltaic systems.
Requirements for Solar Water Heater Tax Credit requirements are as follows: At least half of the energy generated by the solar water heater must come from the sun; Homeowners may only claim spending on the solar water heating system property, not the entire water heating system of the household; The system must be certified by the Solar Rating and Certification Corporation (SRCC); The water must be used in the dwelling; Credit not available for expenses for swimming pools or hot tubs.
For solar panels (Photovoltaic Systems) that convert energy from the sun directly into electricity, the requirements are as follows:
The system must provide electricity for the residence and must meet fire electrical code requirements.
To apply for credits, homeowners should look for IRS form 5695 and save all manufacturer receipts.