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Federal Tax Credits
and Accelerated Depreciation
Residential Solar Electric Systems: -
Federal Income Tax Credit - 30% of the Total Installed System Cost. ($2000.00 cap)
This credit reduces to 10% after December 31, 2008.
- January 1 2007, the California Solar Initiative took effect, giving the Public Utility Commission control over all incentives for existing homes installing a Grid Tie System. The maximum rate is $2.20 per Watt as calculated by the CSI Calculator.
. This will be funded by all utility users and will be reduced as incentive reserves reach MW trigger points until 2017.
The CEC will still be in charge of
new residential construction solar rebates starting at the same level. That program is called the New Solar Homes Partnership and requires
increased Energy Efficiency standards in the construction design for the residence and high performance components approved by the CEC in the
design of the System.
- CEC and CPUC Rebates are considered taxable income by the IRS but not by California.
- Newly constructed active solar systems are exempt from California Property Tax Increases until 2009.
- Solar water heating, except for pools and spas, is eligible for a separate 30% Federal Tax Credit. ($2000.00 cap on residential)
For more information on California Incentives go to the California Solar Initiative Website.
For Federal Tax information go to DSIREUSA.ORG website which has a database of all State and Federal Incentives. You can also
download the Seia Tax
Manual. We strongly suggest that you contact a tax professional before you buy.
Commercial Photovoltaic Systems:
- Federal Investment Tax Credit - 30% of the Total Installed System Cost. This credit cannot be used to lower Taxes below your Alternate Minimum Tax level but can be carried over to the next year.
This Tax Credit reduces
to 10% after December 31, 2008.
- Both CEC and CPUC rebates are considered taxable income by the IRS but not by California.
- For Systems up to 50kW the Incentive is currently $1.55 per watt for Commercial customers paid by your Electric Service Provider.
The system's size depends on equipment
ratings and physical parameters such as tilt, orientation and shading. This incentive is called the Expected Performance Based Buydown or EPBB. A meter is required on the Inverter to verify the system's actual production and the data must be monitored and recorded.
- For larger systems the incentive will be paid monthly for 5 years based on the actual energy produced. This incentive is called Performance Based Incentives or PBI and is currently set at $0.22 per kWh produced, including what you use. System smaller than 50kW can opt for the PBI Incentive to spread the tax on the rebate over 5 years if they choose. All PBI customers must install a Performance Meter and contract with a
Performance Monitoring and Recording Service for
5 years. It is not clear whether these added costs
will be included in the System Installed Cost.
Go to the CSI Trigger Tracker to get updated information
on statewide reservation trigger status.
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Accelerated 5 year Depreciation on the Total Cost of the System less 1/2 of the Tax Credit.( or 85% of the System Cost)
- Newly constructed active solar systems are exempt from California Property Tax increases until 2009.
For Federal Tax information go to DSIREUSA.ORG website which has a database of all State and Federal Incentives. You can also
download the Seia Tax
Manual. We strongly suggest that you contact a tax professional before you buy.
For more information or to order please call
1-888-228-9694 toll free or 707-485-0588 or E-Mail Us
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