Tag Archives: Solar Investment Tax Credit

Do you own a residential rental property?

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Add this home improvement and in the long run, save money and add value.

  • Free electricity from the solar install!
  • No WA State Sales Tax
  • Exempt from Property Tax Assessment
  • A 26% Federal Solar Investment Tax Credit (must be installed before Dec. 31, 2022)
Detached Auxiliary Dwelling Unit (DADU) with PV array

Applicable Solar Incentives:

26% of the total solar invoice is equal to the Tax Credit. For example, a $20,000 solar install would be a $4400 Tax Credit.

Your Residential Rental property is classified as a Business, or income-generating. The 26% becomes a Line Item Credit on your tax liability. This is the same percentage amount as the Solar Tax Credit that residential homeowners enjoy. The IRS wants you to file the Tax Credit differently but the total credit percentage is the same.

Typical Wall-mounted components, incl. energy storage.

Additional Cost Recovery:

If your rental property is a qualified business then it’s likely you can depreciate, or “write off” your investment in Solar. There are limits on how much credit can be taken in a year. I can provide all of paperwork needed to pursue this. Let’s be sure and consult with your accountant first, for instruction and advice regarding this possibility. See #1 below, IRC Section 48 – Energy Credit, MACRS and Accelerated Depreciation Schedule.

References:

  1. IRC Code Section 48 
  2. Investment Credit Form 3468  
  3. Instructions, Form 3468 
  4. Adjustments to basis for Credit IRC Code Section 1016(a)(19) 
  5. IRC Section 25D for Residential Energy Efficient Property 

Guide to Residential Solar – for the Real Estate Professional

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Solar Incentives

– 30% of total installed cost = Federal Tax Credit
– Any electrical upgrades that are “necessary for solar” – get same 30% Tax Credit
– Utilities statewide will *currently* reimburse up to 50% of cost- that offer will reduce slightly in the future (June ’18)
– Property Tax Assessment-exempt
– Free power guaranteed. AKA Net Metering.
– Homegrown “Zero Down Solar” Lenders. As low as 3.5%

Facts

– The WSU Energy Program in Olympia WA monitors State Incentives
– The sooner you go solar, the better!
– The term “Solar” refers to Solar Photovoltaic electrical generating systems.
– Photo = Light :: Voltaic = Electricity
– State Incentive program offer dips slightly each June 30th
– State Incentive program closes June 2021
– 25 year warranty for panels. 40 years of respectable energy production.
– Summertime production is better in Seattle than any other city in the Lower 48
– Excellent resale value, esp. in coastal counties.
– Warranties, ownership, incentives – all easily transferrable

Features

– Various aesthetic choices available. Not all installs have to look the same.
– Panels are lightweight > 40lbs./ea.
– Hail-proof, non-reflective glass is standard
– Per panel monitoring feature is typical. Internet log-in and cloud based features.
– Systems are owned by the real estate property owner. No Leasing in Washington State.

Specifics

– HOA restrictions in WA are slight. Case by case basis, often favors solar with black frames.
– Roof mounting is typical, ground mounts are more common in rural areas.
– Verity CU and PSCCU offer solar-specific loans with flexible/favorable terms.

 

**Local Solar Industry groups such as Solar WA & Solar Installers of WA peer-approve their new members. Choose an installer from their membership!**