Solar Consultants: Tax Credits, Incentives, and Loans
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The North Carolina renewable energy income tax credits expired in 2015. The Federal credits for solar energy systems are still available at 30% through December 31, 2019. The credit decreases to 26% for tax year 2020; drops to 22% for tax year 2021 then expires December 31, 2021.

Disclaimer: The following information has been gleaned from the tax forms and instructions published by the NC Department of Revenue, the IRS, and other agencies. Our interpretation of those has not been reviewed by or endorsed by the Department of Revenue or IRS. We strive to update and maintain this information, but tax laws, forms, and link URL's change continually. Please let us know if we need to correct or clarify anything you read here.

Personal: 30% Income Tax Credits

The 30% credit for solar (not including swimming pool heating) and for certain other high-efficiency appliances (including many instantaneous gas-fired water heaters) is filed on form 5695, available at: http://www.irs.gov/pub/irs-pdf/f5695.pdf.

No system documentation needs to be sent with the tax form, but you should keep a copy of your equipment invoice and type of collector installed so that you can provide the SRCC or other rating information if requested. For complete requirements and other instructions, see EnergyStar.gov's information page. EnergyStar also lists tax credits for efficient non-solar appliances.

Any commercial entity which invests in or purchases qualified solar energy property can take a credit or grant. Only commercial entities are eligible. The Federal definition of energy property is: 1. Equipment that uses solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat (but not to heat a swimming pool). The main applicable paperwork for the credit is IRS Form 3468. There are also Instructions for Form 3468. All you have to know about your renewable energy equipment is its cost, which is entered in Part III.

The American Recovery and Reinvestment Tax Act of 2009 provides the alternative of taking a 30% Section 1603 grant in lieu of the credit.

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Investment Tax Credit Frequently Asked Questions:

Q. Are there limitations on the amount of credit I can take?
A. In any one year you may not take any tax credit that exceeds the total tax owed. The allowable tax credit for any one year is also limited to $25,000, plus 25% of the total tax remaining after the credit is taken. For example, if you are allowed the full 10% credit for an investment of $500,000, which is $50,000, and you owe $100,000 in taxes, you may take $25,000 plus 25% of the remaining $75,000 ($18,750), which equals $43,750. Credit not allowable in one year may be taken in other tax years (see below).

Q. Do I have to use the credit in the year the purchase or investment is made?
A. No. If you cannot use part or all of the credit because of tax liability limitations, you may carry any excess back to each of the three preceding years, beginning with the earliest. If you have an unused credit after carryback, it may be carried forward to each of the 15 years after the year of the credit.

Q. Are there special tax forms needed to take the credit?
A. Yes. You will need form 3486 (Investment Credit), and you may need form 3800 (General Business Credit) and their corresponding instruction forms.

Additional Info: See DSIRE website and contact your accountant or tax professional.

Accelerated Capital Depreciation for Solar Energy Property
Changes in 2003 tax code gave stronger depreciation bonuses for solar. Prior to the 5-year accelerated depreciation, a business gets 50% depreciation in the first year.

The US Government offers a 5 year Accelerated Capital Depreciation for any commercial entity which invests in or purchases qualified solar energy property. Only commercial entities are eligible. This is part of the US Code Citation: 26 USC Section 168.

Available to: any commercial entity in all 50 states is eligible
Eligible Technology: Photovoltaics, Solar Hot Water, and Energy Storage equipment
Additional Info: the United States Government Internal Revenue Service.

USDA Rural Business Enterprise Grants

This grant program is to facilitate the development of rural small business enterprises. Various grants cover equipment installation, energy audits, and feasibility studies.

The programs are designed to assist farmers, ranchers and rural small businesses that are able to demonstrate financial need. All agricultural producers, including farmers and ranchers, who gain 50% or more of their gross income from the agricultural operations are eligible. Small businesses that are located in a rural area can also apply.
Eligible Technology: Most rural projects that reduce energy use and result in savings for the agricultural producer or small business are eligible as energy efficiency projects. These include projects such as retrofitting lighting or insulation, or purchasing or replacing equipment with more efficiency units. Eligible renewable energy projects include projects that produce energy from wind, solar, biomass, geothermal, hydro power and hydrogen-based sources. The projects can produce any form of energy including, heat, electricity, or fuel. For all projects, the system must be located in a rural area, must be technically feasible, and must be owned by the applicant.
Additional Info: Local USDA Rural Development Offices; or on the web at: http://www.usda.gov

Small Business Administration 7A+02 Energy Loan Program

The Small Business Administration offers loan guaranties for up to $750,000 or 75% of loan amount or up to 80% of loan amounts under $100,000. Maximum interest rate is prime plus 2.75%. Terms for working capital is 7 years, equipment is 10 years, and building is 25 years.

Available to: Small Businesses throughout the United States
Eligible Technology: Photovoltaics, Solar Thermal Systems
Additional Info: US Small Business Administration. Contact your local SBA office. Or on the web at: http://www.sba.gov/financing

Public Service NC natural gas company offers a $100-$300 incentive to those who install high-efficiency water heaters and furnaces. To check latest updates and especially for those who are not in North Carolina, go to the Database of State Incentives for Renewable Energy, maintained by the NC Solar Center. Since the list of incentives is very long, use the "Apply Filter" button to the right to narrow your search.

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Last modified: 29 April 2017 3:00 pm