Tax Tips: Large incentive for homeowners and businesses dropping after 2019

This article’s content was co-authored by Auric Energy and originally published on KSL.com as a Brandview (sponsored article). We have updated some information and reprinted it here.

It’s everyone’s favorite time of year – Tax Season. You’ve only got a couple weeks left to gather all the documents for last year, and figure out the damage. One question on plenty of people’s minds is “did I miss out on a bigger refund?”

You know who’s probably not asking that? Taxpayers who installed solar last year.

The Solar ITC (Investment Tax Credit) is currently 30% - dollar for dollar - of the total investment made. There is no cap on the amount you can receive as a credit. But it won’t be that way for much longer.

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For homeowners

Most homeowners know about common tax incentives available to them. Writing off mortgage interest, charitable contributions, and operating a business from your home have some great tax advantages.

However, those are examples of deductions. So, what makes the Solar Investment Tax Credit so special — and simple? Installing solar through a reputable contractor like Auric Energy is an easy and timely process if you qualify, so it’s the best turnaround to get thousands of dollars back.

For example, let’s say a homeowner purchases or finances a solar system for $20,000 this year. The IRS form is simple, thankfully. Take 30% of $20,000, which is $6,000. That’s it - the number-crunching is complete at this point. The homeowner is eligible to receive up to $6,000 on their next tax return. It doesn’t matter if the customer paid cash, or used one of the many financing options available to get a low monthly payment similar to their current power bill. The solar array just needs to be fully operational and inspected by the city or county in 2019.

But what if the solar is installed after December 31st? The ITC will only be worth 26% of the total cost. The homeowner in our example will be eligible for $5,200. That’s nearly a thousand dollars in lost savings for the average homeowner. The more expensive the system, the bigger the difference it will make. There are thousands of dollars on the line if the solar array is on the larger side.

What’s the catch?

It’s advisable to consult with a tax professional and ensure you can claim the credit in a timely manner. You can roll over the credits year to year if there is a balance left over. But, if you already receive a large refund every year, or don’t file taxes at all, you might not be able to claim anything. Be wary of phrases like “rebates” or “government assistance” in advertising or sales pitches.

Doing due diligence on your specific tax situation is important. Solar is a great investment for many homeowners and taxpayers. An accountant will provide the best personalized advice, but they’ll probably tell you to take advantage of this credit while you can. After all, there’s none others quite like it.

For business owners

Just like for residential projects, the commercial ITC is currently 30% and will be stepping down after 2019. The main difference is this: 30% of a commercial-scale solar project comes out to tens of thousands, if not hundreds of thousands of dollars. There’s no need to be a tax wizard. The credit is directly proportional.

If a business or property owner decided to pay $100,000 for solar, they would get a $30,000 tax credit. If they paid $1 million, that tax credit is $300,000. Again, there’s no cap.

Long-term savings. Cost-recapture. Investing in self-reliance. Tax relief. Property value enhancement. These are things that make sense for many businesses. With the solar ITC, combined with other localized incentives, these are available for up to 70% off the total cost. Many states, municipalities, or utilities are willing to chip in to help your business go green.

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Plenty of business owners will take advantage of the full incentive package. Many will miss out. Solar providers are expecting a busy end-of-year workload, so if a business owner waits too long, they could be in crunch time instead of leading the pack.

With commercial solar arrays being anywhere from 60 to 6,000 panels, it’s best to work with a contractor that understands the needs of the business. Auric Energy has more experience installing commercial-scale solar projects than any other company in Utah. “We provide free, customized bids based on the energy usage of the facility, and present all the details down to the dollar to make sure the client knows it’s a good fit,” says Courtney Leishman, the director of commercial consulting at Auric Energy.

Businesses of any size can claim these incentives. Here are a few examples of solar projects in Utah, and how much of their costs they were able to recapture:

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That’s not including their long-term savings potential. The ROI for many businesses is within a matter of a few years. Solar systems will continue to produce for many times over that length. Auric Energy also offers energy-efficiency products as optional upgrades or standalone services.

Even if you don’t own a business, you probably know someone who does. It’s okay if you’re reading this on the clock - maybe your boss won’t mind, since you just found a way to save the company a lot of money.

Are the incentives worth the investment?

There are no other tax credits quite like the ITC. Tax incentives and rising utility costs are two of the most important factors for those who decide to go solar, beyond the obvious environmental health benefits. The federal tax credit will pay for 30 percent of a qualifying solar system, with no cap, and additional incentives exist through some states or utility programs.

“With the incentive set to step down to 26 percent at the end of the year, a lot of customers are making their decision. Currently, you can have up to almost half of your residential system paid for, and more than two-thirds of a solar system for your business. If you plan on staying in your house, it almost makes the decision a no-brainer,” says Kelly Curtis, Chief Financial Officer at Auric Energy.

With Auric Energy’s exclusive Production Guarantee, industry-leading 25-year craftmanship warranty, and top-tier products from nationally recognized manufacturers, the investment is secure regardless of the cost. Requesting a quote is the easiest way to learn more about your personal solar potential.