Home solar energy installation has never been more affordable, as equipment costs have fallen dramatically over the last several years.
But if you’re diligent about leveraging all the financial opportunities available to you, you can ensure that your photovoltaic system is even more affordable.
No. 1: Claim the Federal Solar Tax Credit
The federal solar investment tax credit (ITC) offers the biggest single opportunity for reducing the cost of your home solar installation.
With this lucrative financial incentive, you’ll get back a full 30 percent of your total photovoltaic costs in the form of a credit toward your income tax liability. If your home solar panel system costs $21,000, for example, you’ll be eligible for a $7,000 tax credit.
If you don’t owe taxes this year, don’t worry. You can carry the remainder of your tax credit over to next year.
To take advantage of this 30 percent savings, schedule your photovoltaic system installation soon. The federal solar tax credit will be reduced to 26 percent in 2020, then it drops to 22 percent in 2021. After that, it disappears.
No. 2: Leverage All State and Local Financial Incentives
The federal tax credit can make a huge dent in your home solar power system costs. But claiming it isn’t the only way to reduce your system costs. State and local tax credits, rebates and grants for photovoltaic power installations can add up to thousands more in savings.
Ask your photovoltaic contractor about the offers in your area. You can also check the comprehensive listings at the Database of State Incentives for Renewables and Efficiency (DSIRE) website, a free service provided by the U.S. Department of Energy.
Also check with your local power company, as some offer rebates and incentives for power-saving home improvement projects.
No. 3: Make the Right Financing Choice for Your Home Solar Installation
Leasing may sound like a good idea, since no down payment is required. But if you go that route for solar installation, you won’t own the solar panels and equipment (the leasing company retains ownership). Consequently, you will not be eligible for the federal tax credit or any financial incentives from your state or local government.
A solar loan is a smarter way to finance your new photovoltaic system. And depending on the details of your system, you should be able to find a variety of loan programs that require little or no money down.
If you have equity in your home and a favorable debt-to-income ratio, you could also consider a secured loan. Home equity loans and lines of credit, FHA loans and PACE loans offer favorable terms with low interest rates — and the interest is tax-deductible.
If a secured loan doesn’t work for you, consider an unsecured solar loan. The interest rate may be slightly higher, but you can have approval in minutes. Explore your options online, or check with your photovoltaic contractor. To make it easy for our customers, Intermountain Wind & Solar offers residential solar installation financing.
Would you like more tips on how to cut the costs of a photovoltaic system? Intermountain Wind & Solar offers free consultations to homeowners throughout Utah, Idaho, Wyoming, Colorado and Nevada. Contact us today to discover all the available incentives for home solar installation.