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Should I apply my solar tax credit directly to my solar provider? or get the money myself and use it to help pay the solar off? Is there a difference?

What are the pros/cons between applying the credit to them vs getting it myself?
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3 Replies

Should I apply my solar tax credit directly to my solar provider? or get the money myself and use it to help pay the solar off? Is there a difference?

what makes you think the credit can go directly to the provider?   the tax form that must go with your return contains no provision for directing that the credit to go directly to the provider.  

 

 

 

provider sounds more like the utility which can give pay you for the excess energy you generate

When your utility, or other buyer, gives you cash or an incentive in exchange for renewable energy certificates or other environmental attributes of the electricity generated (either upfront or over time), the payment likely will be considered taxable income. If that is the case, the payment will increase your gross income, but it will not reduce the federal solar tax credit.

Should I apply my solar tax credit directly to my solar provider? or get the money myself and use it to help pay the solar off? Is there a difference?

Are you trying to decide what kind of deal you want with your solar program?  Like buy vs lease?

 

For your personal tax return, you can claim the credit based on what you actually paid.  You can still take out a loan, either from the installer or a bank, but you have to own the system.  

 

For example, you buy a system for $20,000 and you agree to pay $0 down and $150 per month for 15 years (which includes the price plus interest).  The company claims you will save $150 on your household electric bill so the solar panels are actually "free".  You can claim the credit up front based on the $20,000 that you promised to pay (but you can't include the interest included in the payments.)  Then over time, you find out if you really save what they claim you'll save.

 

On the other hand, if you agree to allow a company to install a system on your roof that you lease from them, they get any credits and you don't.   

 

There have been huge problems when people with a leased system try to sell their house, because the solar company has to transfer the lease (which they don't always agree to) and the buyer has to agree to accept the lease (which they might not want to pay for)--sometimes the solar system has to be taken down and sometimes the sales just never can close.

 

So I would never put solar on my house unless I bought it, and owned it, even though that places responsibility on my shoulders. 

 

 

TomD8
Level 15

Should I apply my solar tax credit directly to my solar provider? or get the money myself and use it to help pay the solar off? Is there a difference?

The solar tax credit is non-refundable.  That means that you will not get a refund check for the amount of the credit that exceeds your tax liability.  Therefore the credit can only be "applied" to your tax return.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.
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