Federal Tax Credit (ITC)
What is the Solar Investment Tax Credit (ITC)?
The Investment Tax Credit (ITC) is a 30 % federal tax credit claimed against the tax liability of residential and commercial solar system owners. The residential ITC allows the homeowner to apply the credit to his/her personal income taxes. This credit is used when homeowners and building owners purchase a solar system and have them installed on their homes or office. In the case of a business that installs, develops and/or finances the project, they would then claim the ITC tax credit.
The NYSERDA Megawatt Block Incentive provides a generous up-front grant for solar energy systems, delivered in a ‘dollar-per-watt’ ($/W) format. A number of factors influence the amount of the grant you may be eligible for. The questions below will help you determine your incentive. Feel free to contact us to see what the NYSERDA Grant currently in your area. We welcome your call.
1. Which region of New York do you live in and who is your utility?
2. Is your project residential or nonresidential?
3. What ‘Block’ is your region currently in?
NYC Solar Panel Tax Abatement
New York City is one of 25 major U.S. cities designated by the U.S. Department of Energy as a Solar America City. Leading the nation in adopting solar technology, New Yorkers are recognizing the environmental and economic benefits of harnessing energy from the sun. In addition to cool roofs and green roofs, solar panels are among technologies becoming more common in green building.
Recognizing these benefits, the City of New York passed legislation in 2008 to provide a four-year tax abatement, or tax relief, of 5 to 8 ¾ percent of solar panel-related expenditures (up to $62,500 or the building's tax liability, whichever is less). For more information, visit the Solar Panel Tax Abatement section of the Department of Buildings' Solar Panels page.
Option 1: Small Business/Not-for Profit On-Bill Recovery Loan
Provides the convenience of paying for energy improvements on your utility bill.
● The current interest rate is 3.49% for residential loans. Interest rates are subject to change.
● Payments will be included in monthly charges on your utility bill.
● Monthly payments may not exceed the estimated energy cost savings from the energy upgrades, which means the energy savings may cover most or all of your loan payment.
● Requires a declaration to be signed and filed by NYSERDA. The declaration is not a lien on the property, but is recorded to provide notice to others of the obligation under the loan note.
● In the event your property is sold, the unpaid balance of the loan may be transferred to the new owners.
● For full eligibility requirements and instructions on how to apply for a Residential On-Bill Recovery Loan, visit Energy Finance Solutions or call 1-800-361-5663.
MACRS Depreciation For Solar
WHAT IS MACRS DEPRECIATION?
MACRS (pronounced MAKERS) stands for Modified Accelerated Cost-Recovery System and depreciation is known as the reduction in the value of an asset over time due to wear and tear or normal use.
Depreciation is classified as an expense and may be deducted from your taxable income, thus reducing the cost incurred for the solar power system. Depreciation is your business’ way of recovering the costs incurred from a solar power installation.
MACRS DEPRECIATION FOR COMMERCIAL SOLAR
Commercial solar power systems are eligible to be depreciated over a 5-year, accelerated rate schedule. You can find more information on IRS Publication 946: How to Depreciate Property by
The most important detail to note is that 85% of the cost of solar is eligible for the 5-year depreciation rates. More detail on how to calculate each year’s depreciation expense is shown below.
Qualifying solar energy equipment is eligible for a cost recovery period of five years. For equipment on which an
Investment Tax Credit (ITC) or a
1603 Treasury Program
grant is claimed, the owner must reduce the project’s depreciable basis by one-half the value of the 30% ITC. This means the owner is able to deduct 85 percent of his or her tax basis.
If you are running a profitable business and you can clearly show that the solar power you are generating is for business use, then solar and its incentives may can have a strong impact on your bottom line.