solar tax deduction

Tax Time is Near Solar Energy Credits Can Pay Off Big

in Backup Power Systems

With some of the states solar incentives dwindling due to their popularity, don’t forget about the federal tax credits that are available for a variety of solar related and energy purchases.

You can deduct up to 30% of the installed costs of home solar from your personal tax liability. Of course, don’t take our word for it (or advice) talk to your tax advisor first. The 30% federal renewable energy credit take a serious slice out of the solar cost pie.

Taxpayers who made some energy efficient improvements to their home or purchased energy-efficient products last year may qualify for a tax credit this year. In an article for the Examiner Debbie Mueggenborg tells us the IRS wants you to know about these six energy-related tax credits created or expanded by the American Recovery and Reinvestment Act of 2009.

1. Residential Energy Property Credit This tax credit is for homeowners who make qualified energy efficient improvements to their existing homes. This credit is 30 percent of the cost of all qualifying energy improvements. The maximum credit is $1,500 for improvements placed in service in 2009 and 2010 combined. The credit applies to improvements such as adding insulation, energy efficient exterior windows and energy-efficient heating and air conditioning systems.

2. Residential Energy Efficient Property Credit This tax credit will help individual taxpayers pay for the fulfillment of qualified residential alternative energy equipment, such as solar hot water heaters, solar installation equipment as well as installers, and wind turbines installed on or in connection with their home located in the United States and geothermal heat pumps installed on or in connection with their main home located in the United States. The credit, which runs through 2016, is 30 percent of the cost of qualified property. ARRA removes some of the previously imposed annual maximum dollar limits.

3. Plug-in Electric Drive Vehicle Credit ARRA modifies this credit for qualified plug-in electric drive vehicles purchased after Dec. 31, 2009. The minimum amount of the credit for qualified plug-in electric drive vehicles, which runs through 2014, is $2,500 and the credit tops out at $7,500, depending on the battery capacity. ARRA phases out the credit for each manufacturer after they sell 200,000 vehicles.

4. Plug-In Electric Vehicle Credit This is a special tax credit for two types of plug-in vehicles – certain low-speed electric vehicles and two- or three-wheeled vehicles. The amount of the credit is 10 percent of the cost of the vehicle, up to a maximum credit of $2,500 for purchases made after Feb. 17, 2009, and before Jan. 1, 2012.

5. Credit for Conversion Kits This credit is equal to 10 percent of the cost of converting a vehicle to a qualified plug-in electric drive motor vehicle that is placed in service after Feb. 17, 2009. The maximum credit, which runs through 2011, is $4,000.

Last but not least, don’t forget when you are buying those plug in electric vehicles that a solar charging station is also tax deductable.