Similar to gift idea about tax credit for buying electric vehicle , here is another one-The Solar Investment Tax Credit (ITC) that allows people getting a solar energy system installed to recoup 30 percent of the total cost of a solar energy system.The tax credit is now available to homeowners in some form through 2021 , so it is better that if you are thinking of gift , give your family a gift of installation of solar electric equipment . For year 2016 – 2019 ,the tax credit remains at 30 percent of the cost of the system.
Who is eligible for the solar tax credit?
Here are simple rule to understand if you are eligible for the solar tax credit.
- If you own solar energy system , you are eligible to claim the Federal ITC . Since the main criteria is ownership ,you do not get ITC if you sign a lease agreement for the solar electric system.
- You are also eligible even if the solar energy system is not on your primary residence. If you own the property and live in it for part of the year, you can claim the solar tax credit.
Can I Carry forward Solar tax Credit ?
The answer is Yes. If your federal tax liability is lower than the total amount of your ITC savings, you can carry forward any remaining credits to the following year.
How to claim the solar tax credit?
- Determine if you are eligible for the Federal ITC – make sure you credit for ownership and that federal tax liability are in order
- Complete IRS Form 5965 to validate your qualification for renewable energy credits
- Add your renewable energy credit information to your typical form 1040
Last date to claim tax credit ?
To claim a credit for the system’s costs on your year 2018 return, the installation must be completed by December 31, 2018.
When is solar tax credit expiration?
As it stands, the solar tax credit will continue to offer 30 percent savings until the end of 2019. For residential and commercial photovoltaic systems put in service after that the expiration is as under:
- Solar installations completed in 2020 will be eligible for a 26 percent credit, and PV systems that become operational in 2021 will qualify for 22 percent.
- After 2021, the ITC is slated to expire for homeowners.