Solar energy credits, we are all being flooded with free solar ads. As i read the "inflation reduction act" free is only for people with low incomes. Is this correct?

Hi @Zcar1983 !

 

Thanks for reaching out on this topic.  There are a lot of scams around.  Here is an overview of the scams and legitimate credit provided by the Department of Energy.

 

https://www.energy.gov/articles/free-solar-panels-dont-get-burned

 

Hope this helps!

Cindy

Hello Zcar 1983,

I've not read anywhere that Solar Energy Credits is for poor people only.  The link here tells you all you need to know about Solar Energy Credits and the eligibility criteria. What’s the Solar Energy Tax Credit? 

Have a great day.

There is no such thing as "free low income solar" in the inflation reduction act or anywhere else.  

 

Solar can be installed 2 ways.

1. You buy the system and you own it. 

2. You lease the system from the installer.

 

If you buy the system, you get the credit.  You make monthly payments to the installer unless you paid up front. You have to pass a credit check and be able to afford the payments.  If you make enough electricity, the decreased public utility bill might offset your payment for the system and you might even be able to sell extra electricity back to the utility (they pay you, depending on your state).

 

If you lease the system, you still get the credit.  You must pay the lease payment, but the installer claims that your energy savings will cover the payment.  For example, if your old public utility bill was $200/month, the installer will work out a lease payment of $200 per month, so it's "free" but not really. If you make extra electricity, the installer sells it and keeps the profit for themselves.  If you make less electricity and can't cover the lease payment, they will bill you for the difference.

 

A leased system can make it impossible to sell your home, because the buyer must agree to assume the lease and be bound by the terms, and the installer has to agree to transfer the lease.  If the seller doesn't want to lease the solar, you may have to pay to remove it from the home and pay a substantial lease cancellation penalty.

 

 

The ads you reference are very misleading. 

 

There is nothing I am aware of in the Inflation Reduction Act that makes solar panel installation "free." The residential solar energy credit is worth 30% of the installed system costs through 2032. 26% in 2033. 22% in 2034 and expires after that. There are no income limits on the solar tax credit, so all individual taxpayers are eligible to claim the credit on qualifying solar energy equipment investments made to their homes within the United States.

 

To qualify for claiming the solar tax credit on your tax return, you’ll first need to meet some eligibility criteria:

• Your solar equipment needs to be installed between January 1, 2017, and December 31, 2034.
• The solar equipment must be located at a residence of yours within the United States.
• The solar equipment is new or being used for the first time (meets the original installation requirement for claiming the credit).

From there, you’ll need to meet one of these two requirements to claim the credit:

• Purchase the solar system with cash or through some form of financing that isn’t a lease or an agreement to pay a solar company for electricity generated by the system.
• Purchase an interest in a community solar project that is separate from your residential property, if the electricity generated is credited against, and doesn't exceed, your home’s electricity consumption.

For more information, please see: https://turbotax.intuit.com/tax-tips/going-green/federal-tax-credit-for-solar-energy/L7s9ZiB4D

 

Thank you,

 

Ruth C-L, CPA, Attorney