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Solar cells and the IRS should be friends, considering that the government purports to be seeking alternative energy sources. The U.S. Tax credit should be given by government to those who spend money on solar panels. But does it?
The worthiness of solar power panels in the IRS' eyes is found in the Energy Policy Act of 2005 for Folks. In 2006, in...
Solar panels appear to be a very good way to create less expensive electrical energy. They seem a great way to heat water, as well as the air inside homes.
Solar panels and the IRS should be friends, considering that the government purports to be seeking alternative energy sources. The U.S. Tax credit should be given by government to those that purchase solar panel systems. But does it?
The worth of solar power panels in the IRS' eyes is found in the Energy Policy Act of 2005 for Individuals. In 2006, inflation modification numbers received, but the act remains basically the same.
Energy Policy Act of 2005 for People (EPACT) - Summary
Individuals can make purchases, and receive tax benefits for doing this. The law provides tax credits in making your principal residence, which must certanly be in the U.S., more energy efficient. In addition, it provides tax credits for buying specific energy-efficient items, including alternative motor vehicles such as compounds.
Solar panel systems, says IRS, will earn tax credits if they are on your own main home, and that home is in the U.S.
Nearly all of EPACT remains in place all through 2007. Many think it will be restored or extended in 2008.
Aspect Regarding Solar Power Tax Credits
The Energy Policy Act of 2005 makes a tax credit offered to those who add capable solar panels to their homes in the U.S. The IRS allows one credit corresponding to 30 % of the qualified investment in a solar power up to maximum $2,000 credit. The IRS also allows an equal credit for buying a solar water heating system. You could credit of up to $4,000, $2,000 for solar water heating, and $2,000 for solar cells.
Whether you include solar panels or a solar water home heating, you cannot use any section of it to heat a spa or pool.
Solar panel systems, for IRS tax credit qualification, must be placed in service between December 31, 2005 and January 1, 2008.
State Concessions or Tax Incentives and the IRS
You may find that your solar power panels meet the criteria for state rebates or tax credits. Your states power office website may have more information on that. If your state or power does provide incentives for installing solar panels, the IRS tax credit applies to the foundation remaining after you have taken state incentives.
Example: Your $10,000 cell array gets $5,000 in state tax incentives. It would then be eligible for a credit add up to 30 % of $5,000. Your Federal IRS tax credit could be $1,500.
To discover any tax credits your state may offer, basically research on the state name with the words solar motivation, without quotation marks.
Wouldn't a Tax Break Be Better than a Tax Credit?
Generally talking, a tax deduction is less valuable for you compared to the same quantity of tax credit. A tax reduction takes away a percentage of the tax the IRS is owed by you. But your tax is reduced by a tax credit, dollar-for-dollar.
Solar Panels missing GOVERNMENT Breaks
Even if EPACT had not been signed into law, and the IRS offered number tax breaks, solar power installation could be a wise investment. Many realize that a solar panel array pays for itself within 3 to 4 years. Money is then saved by them on energy for many years with little maintenance.
Therefore, while tax breaks are pleasant, you may still want to do more research into the potential savings of solar panels.
Disclaimer: Please be aware that the writer isn't a tax professional and cannot provide you with tax advice. The information above is for educational purposes only. this site
