Households can take advantage of Florida’s annual average of 237 sunny days by installing solar panels on their homes. Florida ranks 6th in the country for solar use.
What is a clean energy tax credit?
The Residential Clean Energy Credit allows a taxpayer to deduct up to 30% of the cost of certain energy saving improvements to your home. In addition to solar panels, the credit covers less common technologies such as solar water heaters, wind turbines, fuel cells and geothermal heat pumps.
Installation of the solar panels must be started in the tax year that you claim the credit, but it does not need to be completed in the same year.
The credit cannot be greater than the tax owed. So, if you do not owe federal taxes, you cannot take the credit. You can, however, carry forward any excess credit for the next year.
What are the criteria to claim the clean energy tax credit?
A few criteria need to be met in order to take advantage of the tax credit. The credit only applies to the home you live in. In addition, you must own the solar panel system; leasing the system does not qualify for the tax credit.
The system must be a new installation. If you buy a home with solar panels already installed, you are unable to utilize the tax credit.
Can I deduct the interest if I finance the solar panels?
If you are financing the solar panels, you are able to claim the full 30% of the cost toward the credit. However, interest, fees and warranties are not eligible expenses when calculating the tax credit nor do they qualify as an itemized tax deductions on your tax return.
What about selling excess electric back to the utility company?
This is called “Net Metering.” This allows you to send the excess energy your solar panels produce back into the grid, earning credit towards your electric bill. At the end of the month, you will only be charged for the energy you actually used from the utility company.
Do I have to install the solar panels on my roof?
No. As long as the system is on your property, you can still take advantage of the tax credits.
Are there any other incentives available in Florida for installing solar panels?
There is no sales tax on solar panel systems. Florida provides both sales tax and property tax exemptions for solar panels, continues to mandate net metering policies for excess solar generation, and offers property assessed clean energy (PACE) loans for solar.
If you have questions about this featured topic or other accounting and tax related topics, please do not hesitate to contact us at 727-327-1999 OR [email protected].
ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.
