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Various kinds of building improvements focusing on energy efficiency will make you eligible for an energy tax credit. The execution of a project focusing on solar-based energy production is one of the viable options.
The program is available throughout 2016 and if you’re planning an upgrade, the time is right to get started.
Terms and Conditions
The installation of an Energy Star-approved system based on solar panels until 2016 will make you qualify for an energy tax incentive. You’ll get to claim 30 percent of the installation cost as a tax incentive for the particular year.
The incentive amount is to be taken directly off the tax payments. It doesn’t work as a taxable income deduction. This credit can be claimed for a wide range of residential projects including your primary residence and a property used for vacation purposes. The incentive will apply to both new buildings and modifications of existing constructions.
It’s important to keep in mind that the incentive does not apply to rental property you decide to modify.
How to Claim the Energy Tax Incentive for Solar Installations
An IRS Form 5695 has to be filled for the tax incentive to be claimed. The form is used to calculate the amount of the incentive , after which the sum is entered on the 1040.
It’s possible for an individual to end up having a larger incentive amount than the due tax income. The extra money cannot be gotten back from the IRS. This amount will be carried over for the following tax year.
Additional Benefits of Solar Panel Project Execution
Installing solar panels as an option for generating electricity comes with benefits that exceed the financial and taxation incentives. There are many reasons why you should give this kind of project some consideration.
A solar panel installation brings the value of residential property up. Both home buyers and real estate investors are on the look for sustainable developments. Depending on the location, the addition of a solar panel system increases the value of a home by anywhere between 5.50 and 5.40 dollars per watt, a Lawrence Berkley National Laboratory study suggests.
Explained in simple terms – a 3.1 kilowatt solar energy system will add approximately 17,000 dollars to the value of residential property.
Depending on the size of the solar panel installation, property owners can save a lot of money on their energy bill. A big portion of property owners that have a solar installation will reduce their electricity bill by nearly 50 percent. Some individuals that carry out more ambitious projects will eliminate the electricity bill altogether.
According to statistics, an average solar installation will produce 840 kilowatt hours per month. An average US family needs 920 kilowatt hours per month to lead comfortable life.
Finally, depending on the location, solar panels can even be used to generate some passive income. There are great renewable energy incentives in numerous states and every installation that qualifies for such programs will result in a payment for clean energy production. Doing a basic online search will help you figure out whether you’ll get to benefit from such an incentive.
Solar systems are constantly growing in popularity because the price of the equipment is going down and such installations bring a high return on investment. The availability of options like the energy tax incentive makes such sustainability projects even more lucrative.
Steve Nanos
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