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Current State & Federal Solar Incentives
California Rebates until 2016
Currently PG&E offers a generous cash rebate on new solar electric systems, up to a maximum of $2.50 per watt of solar, currently covering 15-35% of the total costs. To be eligible the system must offset utility power, use program-eligible equipment, and have a ten-year warranty. Rebate levels actually vary by install type: Residential new construction is currently $2.50/W, residential retrofits are eligible for $1.55/W, commercial installations (new construction or retrofit) also currently get $1.55/W, and non-profits (i.e. churches, schools, govts, charities) receive $2.30/W.
Because the solar rebate program is a two-part process, systems do not have to be installed, or even fully paid for, in order to have a cash rebate "reserved" in your name for a solar electric system. After a rebate is reserved, the installation must be complete within 12 months or it will expire. (For solar systems being installed on new construction projects or non-profits, an extended deadline period of 18 months is given.) The only commitment we require to reserve a rebate, and hold the price, is a 10% deposit. We handle all rebate paperwork on our customers’ behalf as well as all PG&E interconnection paperwork, plus pulling the building permit.
*** WARNING!!! NEXT DEADLINES ARE IN 2009!!! ***
The $1.55/W rebate level funding (for commercial installs only) is projected to run out sometime in the 1st half 2009. The $1.55/W rebate level funding (for residential retrofits only) is projected to run out sometime in the 2nd half of 2009. As soon as a specific target amount of rebates has been reserved for PG&E’s customers at the existing level, the current rebate will be reduced, which is projected to occur sometime in 2009 for all classes of customers. Submitting a complete rebate reservation application before a drop-down deadline is the best way to have your solar rebate reserved at the higher current level
Federal Tax Credits until 2016
For most solar projects, the federal government offers a 30% Solar Energy Tax Credit for property owners that install a system. The credit is filed only once, for the tax year during which the system was installed, and is equal to 30% of the post-rebate amount spent. If your federal taxes are less than the available solar tax credit, any excess tax credit can be carried forward (residential carries forward one year, commercial carries forward 20 years). Also available is an additional 30% tax credit (capped at $2,000) for residential solar hot water systems.
Property Tax Exemption for Installs Done Before 2010
According to the National Association of the Remodeling Industry, Appraisal Journal, the Electric & Gas Industries Association, Wells Fargo Bank, SMUD, as well as many local appraisers, the addition of a utility-connected solar electric system will instantly increase a property’s value anywhere from 45%-100% of the full pre-rebate value of the system. The increased resale value of a solar-powered property can allow a property owner to recoup the initial cost of the system and possibly more, making early payback happen when the property is sold! Solar systems don’t require a 10-20 year commitment in order to reap the financial rewards. As an example, if you sell a solar home in six years, then the payback is six years - plus all the utility bill savings in between.
Tesla Electric is working on maintaining a list of solar-knowledgeable appraisers to help ensure that you receive the proper return on your solar investment, if and when you choose to sell your solar property. As a side benefit, by law (CA Tax Code Section 73) the increased property value from a solar system installed as a retrofit before January 1st, 2010 is exempt from property tax. That’s right: increased property value without increased property tax. Due to expire at the end of 2005, this state property tax provision was extended through 2009.
For Businesses:
Federal Tax Credit plus 5-yr Accelerated Depreciation
The federal government currently offers businesses a tax credit equal to 30% of the pre-rebate cost of installing a solar system. Even home-based businesses qualify but at a reduced benefit, calculated using the ratio of office space versus home space. As an example, if someone has a home office or business that uses 25% of the total home area and they install a system for $40,000, the uncapped federal tax credit is calculated against only 25% of the $40,000 total solar system cost. The credit may not be claimed for energy property used by a tax-exempt organization, but they may lease a system that was paid for by a business entity that does qualify.
Solar energy systems for businesses also qualify for the 5-year Modified Accelerated Cost Recovery System (MACRS) depreciation deductions (IRS Form 4562). See Section 168 of the Internal Revenue Code. Currently solar energy systems are classified as 5-year properties. The state of California also offers accelerated depreciation on commercial solar installations, with a difference acceleration model for corporate and non-corporate businesses. Check with a qualified tax preparer or accountant for accurate advice.
For additional information, visit these websites:
Or Contact Tesla Electric at: 1-800-479-7803
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