Like all tax incentive schemes, you must read the small print first. Some of these incentives only apply to commercial business solar projects. Of course, you are looking for tax information for projects relating to solar power for homes.
Don’t forget to talk with the federal government, and ask them for form 5695. This will allow you to tell them your costs for installing a residential solar power system. If you live in certain states or countries, you may get a 30 percent tax credit for your costs, up to a total of $1,500 for existing homes. This is on offer all the way through 2010 for major home improvements as well. You could also claim solar hot water heater system credit, as long as the system is found in your residential solar power plans. The most of a credit amount you can get is $2,000.
They just recently removed the $2,000 cap for solar hot water heaters. Nevertheless consumers who use solar hot water heating can still claim the full 30 percent of the system’s cost as a tax credit. This also applies to solar panels provided they are built to comply with the latest electrical and fire safety codes.
Qualified costs for this tax credit include the money you spent on the solar system and the hardware. Most residential solar kits include the equipment and the hardware you will need to build a complete system. For a DIY residential solar power system, the costs can be less if you know where you shop for your components. You will reap more of the benefit of this tax credit.
Each state also has its own set of tax credits and incentives for residents who invest in solar electricity projects. A database was set up to catalog these incentives for renewable energy sources. It is called DSIRE (Database for State Incentives for Renewables and Efficiency). Check it out at www.dsireusa.org.
Looking at California as an example, the city of Sacramento implemented a residential energy efficiency loan program to enable district residents to defer the cost for the home improvements involving renewable energy sources. If you own your own property, you can receive one of these loans at the reasonable interest rate of just 8.5 percent.
It doesn’t hurt to look and see what your state and federal government is willing to do for you when it comes to saving the planet. Use tax incentives to turn your residential solar power system into an affordable proposition.
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