Category Archives: Tax Credits

Solar Energy Credits For Homeowners and Business Owners

Green Energy

Green Energy

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.

CPA Deerfield Beach


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Residential Energy Tax Credits for 2012

Summer’s here and if you’ve been thinking about “going green” and making your home more energy efficient, then there’s no time like the present, especially if you take advantage of residential energy tax credits still available to homeowners.

The Residential Energy Efficient Property Credit is available to individual taxpayers to help pay for qualified residential alternative energy equipment, such as solar hot water heaters, solar electricity equipment and residential wind turbines. Qualifying equipment must have been installed on or in connection with your home located in the United States.

Geothermal pumps, solar energy systems, and residential wind turbines can be installed in both principal residences and second homes (existing homes and new construction), but not rentals. Fuel cell property qualifies only when it is installed in your principal residence (new construction or existing home). Rentals and second homes do not qualify.

The tax credit is 30% of the cost of the qualified property, with no cap on the amount of credit available, except for fuel cell property.

Generally, labor costs can be included when figuring the credit. Any unused portions of this credit can be carried forward. Not all energy-efficient improvements qualify so be sure you have the manufacturer’s tax credit certification statement, which can usually be found on the manufacturer’s website or with the product packaging.

What’s Included in the Tax Credit?

  • Geothermal Heat Pumps. Must meet the requirements of the ENERGY STAR program that are in effect at the time of the expenditure.
  • Small Residential Wind Turbines. Must have a nameplate capacity of no more than 100 kilowatts (kW).
  • Solar Water Heaters. At least half of the energy generated by the “qualifying property” must come from the sun. The system must be certified by the Solar Rating and Certification Corporation (SRCC) or a comparable entity endorsed by the government of the state in which the property is installed. The credit is not available for expenses for swimming pools or hot tubs. The water must be used in the dwelling. Photovoltaic systems must provide electricity for the residence, and must meet applicable fire and electrical code requirement.
  • Solar Panels (Photovoltaic Systems). Photovoltaic systems must provide electricity for the residence, and must meet applicable fire and electrical code requirement.
  • Fuel Cell (Residential Fuel Cell and Microturbine System.) Efficiency of at least 30% and must have a capacity of at least 0.5 kW.

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