If you’ve wondered when the best time to invest in solar energy is, it’s now.
With prices for photovoltaic panel systems at historically low levels, many people have begun to seriously consider adding solar energy to their homes and businesses. While photovoltaic panel costs may continue to decrease over the next few years, a key federal tax credit incentive is set to change next year. Once this important incentive is gone, PV solar system costs will increase, placing this important technology out of reach for some consumers.
What Is the Federal Tax Credit?
Purchasers of complete home or business solar systems, emergency backup systems and modules for some recreational vehicles and boats used as second homes are eligible for a federal tax credit. Currently, this credit reduces owners’ federal income tax liability by 30 percent of the cost of their solar energy systems and installations.
Many industry experts believe that this credit has been key to the widespread adoption of solar energy across the United States, as it has made it more affordable to middle-class and working-class families. Unless Congress amends the deadline or the solar incentive regulations, businesses installing solar systems after 2016 will only be able to claim a 10 percent tax credit. Residential customers will receive no tax credit whatsoever.
How This Affects Financing
This change will significantly affect the potential savings for home and business owners. Consider, for example, a system that costs $50,000 to install. The 30 percent credit on this system would be $15,000.
Under the new guidelines, homeowners installing this system after 2016 would not be able to claim any of their costs. Commercial customers installing after 2016 would only be able to claim $5,000 of the initial investment costs ― a difference of $10,000. Not only will this force customers to shoulder a larger percentage of the initial expenses, but the long-term effect is that the payback time (the amount of time it takes for a solar energy system to reach grid parity and cost the same as or less than traditional electricity) will ultimately be longer.
Schedule Installation Now, before You Miss Out
In order to be able to claim the 30 percent tax credit, your PV system must be in service before Dec. 31, 2016. This means that the project must be completed by that time, not started by that date. As the deadline approaches, a bottleneck is expected when providers will try to squeeze in last-minute residential and commercial installations.
Don’t miss out! Schedule your installation as soon as possible to ensure its completion before the deadline.
Intermountain Wind and Solar, serving the Intermountain West including Utah, Nevada, Wyoming, Colorado and Idaho, specializes in the design and installation of residential and commercial photovoltaic energy systems. Contact us today to learn more about how affordable this technology has become, and to schedule your consultation to invest in solar energy before it’s too late!