Consumer Tax Incentives

Solar Energy Systems

What are the tax incentives for residential solar systems?

Homeowners are eligible for tax credits for qualified solar water heating and photovoltaic systems. Solar water heating systems produce hot water, photovoltaic systems produce electricity. The credits are available for systems "placed in service" between January 1, 2006 and December 31, 2016.

Note: This is a basic guide to the credit. For more detailed information, go to www.seia.org and download the Guide to Federal Tax Incentives for Solar Energy, or click here for recent FAQs regarding the new legislation.

Who is eligible for the tax incentives?

The tax credits go to individuals who install qualifying systems on homes they use as a residence.

In the case of cooperative apartment buildings owned by a corporation, SEIA states that "if the corporation spends money on installing qualified solar property, each shareholder is allowed to claim residential solar tax credits on his or her share of the spending."

In the case of condominiums, SEIA reports that when the condominium management association "spends money on installing qualified solar property, each member of the association can claim the residential solar tax credits on his or her share of that spending," so long as the management association qualifies as a homeowners' association under the law, and the majority of the units in the condominium are used as dwelling units.

What are the incentives and how do they work?

The tax credits are for 30% of the cost of the system. For individuals the maximum credit is $2000 for photovoltaic systems and $2000 for solar water heating systems in any tax year. After December 31, 2008, the cap on photovoltaic systems ONLY will be removed. To qualify, residential systems must meet certain criteria as follows:

Solar water heating:

Photovoltaic systems:

Alternative Minimum Tax and the Residential Solar Tax Credit

According to SEIA, the new legislation passed in October of 2008 "allows individual taxpayers to use the credit to offset AMT liability, and to carry unused credits forward to the next succeeding taxable year."

What do I have to do to qualify for these incentives?

To qualify, tax payers will probably need to have evidence regarding:

Where can I learn more about qualifying products?

Good sources of information about these systems include:

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