In the final part of this series, we are going to delve into the Solar Federal Income Tax Credit. I can’t emphasize enough that we are not tax professionals, and any information gained here should be treated as an introduction to a concept and coupled with a suggestion to seek out professional advice for your own situation. In addition, the government has put together additional resources at https://www.energy.gov/eere/solar/homeowners-guide-federal-tax-credit-solar-photovoltaics, so we suggest taking a look here as well.
Solar FITC – The FITC is a specific tax credit given as a result of solar installations of the current tax year. This past summer, the credit was increased back to 30%, and was extended for 10 years. As a way to make solar ownership more accessible, the majority of solar companies have adopted a promotional period where they will allow you 16 to 18 months to get this credit and apply it to the principle of your loan. During this promotional period, the payments are lower so they represent what you would pay if the principle had already been reduced, but at the end of the period the financial institution is waiting for at least the full amount of the credit or more, or your payments are going up. This becomes a problem for the customer if they aren’t going to get the tax credit within 2 tax cycles, and they need to be prepared for an increase in payment, unless they are able to front fund it and reimburse the funds from future credits. Now, if by chance that does happen, it’s not the end of the world. Another way to utilize the credit is to use it to offset the increase in the payments. For example, if you only have a tax liability of $1,000 a year, then you have 84 dollars a month towards your payments. It’s all in how you plan out for it.
If you have followed along through this entire series, you have probably noticed that there is a lot that goes into doing solar right for a home, which is why we take our role in it so seriously. If you know anyone exploring solar or know someone who is already seeped in their solar journey that would appreciate a partner and advocate to guide them, encourage them to reach out to us. Otherwise, thank you for reading, sharing, and being a part of the best part of this industry!