Ever thought about using alternative energy technologies to assist you in managing the cost of the energy used in your business? Yes, then you should be aware of a federal income tax benefit (tax credit) that is substantial and that applies to the acquisition of a wide variety of alternative energy property.
The credit is intended primarily for business users of energy. However, the energy credits apply to taxpayers that use alternative energy in their homes and to taxpayers that produce energy for sale.
The business energy credit equals 30% of the cost of the following two types of Solar Equipment placed in service before calendar year 2017:
(1) equipment that uses solar energy to generate electricity for heating and cooling structures, for hot water, or for heat used in industrial or commercial processes.
(2) equipment using solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight.
Another favorable aspect of the credit is the possibility that, for the same property, the credit can sometimes be used in combination with other subsidies—for example, federal income tax expensing, state tax credits or utility rebates.
There are business considerations, unrelated to the availability of tax and non-tax subsidies that can influence your decision whether to use alternative energy. For example, you will want to be satisfied that you have a plan for managing the costs, in time and money, of maintenance and operation of the alternative property.
Also, we are aware that even if you choose to use alternative energy, you might choose to do so without owning the equipment, even though that would mean forgoing the business energy credit. For example, some contractors provide installation of solar equipment for free, keep ownership of the equipment and charge you for energy use in an arrangement that might work better for you than an acquisition subsidized by the tax credit (and, possibly, other benefits).
Then there is the hurricane factor. Have you ever lived through an extended power outage after a hurricanes strikes? Motel and restaurant costs are expensive. This may be able to provide a source of power to run emergency essential electrical loads, making it possible to stay in your home during emergencies.
There are many issues; both tax and non-tax, to consider in deciding whether to use alternative energy and the terms in which it may be chosen. We would be pleased to assist in resolving these alternative energy issues.
The information provided through this article is not a substitute for tax or other professional advice. Each user of this should always consult their own legal or other professional advisors; or call us to discuss the facts and circumstances that apply to the user.