Solar Investment Tax Credit
In an effort to repower America, Congress passed the Emergency Economic Stabilization Act of 2008 (H.R. 1424) in October. In addition to the widely publicized bail-out package, this act included provisions regarding the Solar Investment Tax Credit. The credit is calculated based on the individuals expenditures for the equipment and installation, excluding any subsidies.
In years past, homeowners were eligible for a 30% tax credit for the purchase of a solar electric system, but this credit had been capped at $2,000. According to Section 103 of H.R. 1424, not only has this tax credit been extended for eight years, but for 2009, the cap has been lifted. Therefore, owners of residential solar systems could be eligible for a 30% Federal Tax Credit, thus greatly increasing the affordability of solar electricity.
Reference H.R. 1424, Division B (Energy Improvement and Extension Act of 2008), Title I (Energy Production Incentives), Subtitle A (Renewable Energy Incentives), Section 103 (Energy Credit).
Prior to the latest developments, the following information had been available:
Now available: IRS Form 5695 & Instructions: Residential Energy Credits for Tax Year 2007
The Energy Policy Act of 2005 (H.R. 6, Sec. 1335) established a 30% tax credit for solar equipment capped at $2,000. Initially scheduled to expire at the end of 2007, the tax credits were extended through December 31, 2008, by Section 206 of the Tax Relief and Health Care Act of 2006 (H.R. 6111).
The credit is calculated based on the individuals expenditures for the equipment and installation, excluding any subsidies.
To be eligible for the credit, a system must be "placed in service" or activated on or after January 1, 2006, and on or before December 31, 2008. Expenditures with respect to the equipment are treated as made when the installation is completed. If the installation is on a new home, the "placed in service" date is the date of occupancy by the homeowner.