Solar Energy Property Credit Extended


SolarTaxpayers who install solar electric or solar water heating systems in their homes may qualify for a generous income-tax credit. And thanks to recent legislation, the credit for solar energy property will be available through 2021.

REEP Credit Refresher The credit is a component of the residential energy efficiency property (REEP) credit, a credit available for up to 30% of the expenses paid for qualifying solar energy, fuel cell, small wind energy, and geothermal heat pump property. For fuel cell property, there is an additional crecht cap of $500 for each half kilowatt of capacity. Otherwise, therE" is no dollar limit on the amount of the credit, and no phaseout applies for taxpayers at higher income levels.

Each type of equipment must meet specific energy-efficiency requirements and be installed in the taxpayer's new or existing U.S. residence. Fuel cell property must be installed in the taxpayer's principal residence.

New Timelines Under the original REEP credit rules, qualifying property must be placed in service before January 1,2017. This "sunset" date still a[JJ)lies La all but qualifying solar energy property. The new legislation extends the credit for solar energy property, gradually reducing the credit percentage as follows:

  • Placed in service prior to .January 1, 2020 - 30(M)
  • Placed in servicE" during 2020 - 26%
  • Placed in service during 2021 - 22%
  • Placed in service after December 31, 2021- 0%

If you have any questions about the credit, please don't hesitate to contact us.

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