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Residential Renewable Energy Tax Credit

Is there a tax credit for solar water heaters?
Yes, Sun-Tec Solar Water Heaters qualify for a tax credit.

How much: 30% of the cost (including installation/labor costs), with no upper limit.

Timing: Tax credit in effect in through 2019. Must be installed in a home you own and use as a residence (no rentals, but second homes qualify) between January 1, 2006 and December 31, 2019.

Details: At least half of the energy generated by the solar water heater (“qualifying property”) must come from the sun.

  • Homeowners may only claim spending on the solar water heating system property, not the entire water heating system of the household.
  • The system must be certified by the Solar Rating and Certification Corporation (SRCC).
  • The water must be used in the dwelling.
  • The credit is not available for expenses for swimming pools or hot tubs.

How to apply: IRS Form 5695 Residential Energy Credits PDF

 

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Claim Up To 30%

A taxpayer may claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit located in the United States that is owned and used as a residence by the taxpayer. Expenditures with respect to the equipment are treated as made when the installation is completed. If the installation is at a new home, the “placed in service” date is the date of occupancy by the homeowner. Expenditures include labor costs for on-site preparation, assembly or original system installation, and for piping or wiring to interconnect a system to the home.

If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year. The excess credit may be carried forward until 2019, but it is unclear whether the unused tax credit can be carried forward after then. The maximum allowable credit, equipment requirements and other details vary by technology, as outlined below.

 

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Solar Sales Tax Exemption

Solar energy systems have been exempt from Florida’s sales and use tax since July 1, 1997. The term solar energy system means the equipment and requisite hardware that provide and are used for collecting, transferring, converting, storing or using incidental solar energy for water heating, space heating and cooling, or other applications that would otherwise require the use of a conventional source of energy such as petroleum products, natural gas, manufactured gas or electricity.

This exemption was originally set to expire July 1, 2002, but it was extended for three more three years. In May 2005, the exemption was made permanent upon the enactment of H.B. 805. The Florida Solar Energy Center certifies to the Florida Department of Revenue a list of eligible equipment and hardware. Sellers of solar energy systems or components thereof are required to document exempt sales. The Florida Department of Revenue recommends that the purchaser complete this form and present it to the seller.

 

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Florida Solar Rights Law

Florida law forbids ordinances, deed restrictions, covenants, or similar binding agreements from prohibiting solar equipment use. Under this law, a homeowner may not be denied permission to install a solar collector, clothesline, or other energy device based on renewable resources by any entity granted the power or right in any deed restriction, covenant or similar binding agreement to approve, forbid, control, or direct alteration of property.

While a homeowner cannot be prevented from installing a solar energy system, certain restrictions may be imposed without violating the law. However, those restrictions must be reasonable, not arbitrary, and uniformly imposed on homeowners in the subdivision. The restrictions cannot act to impair the performance of a solar system or it may be seen as “effectively” prohibiting solar.

Florida Solar Energy Research & Education Foundation

 

 

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