As Florida creates incentives for residents to turn towards solar power, it’s no surprise that you’re also looking into how you can benefit. After all, these incentives are expected to disappear by 2024, so taking advantage of them while they last would be ideal.
These tax credits and incentives are attractive and Florida residents are consulting our solar company in Florida to take advantage of them. If you still have your doubts, here’s a quick guide.
Solar Tax Credits and Incentives
There are a few different incentives and credits offered by the government, but we’ll explain them all.
Federal Solar Investment Tax Credit
Also known as the ITC, this incentive has the biggest impact on how much you’ll end up paying on your solar panels. In 2020, the tax credit was 26% of the system cost including installation and labor. By the end of 2022, the tax credit will be reduced to 22% of the system, installation, and labor.
Solar System Property Tax Exemption
Solar panels can add a huge value to your home, but you won’t have to pay taxes on this value increase. Instead, you can benefit from the solar power without paying extra home taxes for as long as you own the house. Since for every $1 in electricity you save, your home gains $20 in value, this can almost double the value of your home as it is.
Home Solar System Sales Tax Exemption
The installation and entire solar power system costs are exempt from sales tax. This means you’ll save an extra 6% (not including the ITC incentive above). Keep this in mind when you start looking into prices: you’ve already saved 6%.
Am I Eligible?
To claim the tax exemption and ITC in 2022, there are just a few requirements you have to meet and prove as a residential home owner.
First, you have to have started the installation process sometime between January 2006 and December 31, 2021. You also need to make sure that all fire and electrical codes are met when installing the system.
Second, the solar panel system must be placed at a residential location and you must be the property owner. If you are renting the home or the solar panels, you will not qualify. You must own both the property and solar panels, whether or not they are installed at your primary residence.
When installing solar panels on a business property, there are just a few variations. Of course, you must own the property and have started installation no later than December 31, 2021.
Unless your business is a school, church, or other tax-exempt charity, you must also state that the system is used by someone paying US income taxes and prove it. Lastly, the power cannot be used to heat a swimming pool.
Claiming these exemptions and tax credits are fairly easy as long as you’ve kept good track of all purchasing dates and fees. You’ll have to present all receipts and fill out the IRS Form 5965, but the government has ensured the process is straightforward and easy in an attempt to encourage residents to convert.
If you’re a Florida resident or have a home in Florida, it’s time to get started on making the change before these benefits go away.