Took the plunge. Finally going solar!

[fordmantpw]

So how does the tax credit work? I know it's different from a deduction. How does it work?

Say I make $30K per year and pay $5K in federal taxes.
I buy a solar system that costs $20K up front.

What happens?

Let's assume, without solar, that $5k is your complete tax liability. If you were to file you return, you would pay $0 and would get $0 back.

So, let's add solar. You spent $20k and you get a 30% tax CREDIT. That is a reduction in the taxes owed. So, you take $6k off taxes due. But, since your tax responsibility is only $5k (and you paid it all in), you get all $5k back. But, you carry that remaining $1k over to the following year.

Fast forward 1 year. Again you make $30k with $5k in tax responsibility. You have a $1k credit carried forward from the previous year. So, when you file your taxes, since you paid exactly what you owed again, you get the remaining $1k as a refund.

It works the same way with geothermal (and other) credits too. We actually had a carryover when we built our house due to our geothermal credits.

You get 30% on $20k, or $6k. So you would get a tax refund of $1000.

Not really. You can't get more back than you pay in.

 

[MossRoad]

You get 30% on $20k, or $6k. So you would get a tax refund of $1000.

I think that's not correct, from what I've read.

 

[MossRoad]

Let's assume, without solar, that $5k is your complete tax liability. If you were to file you return, you would pay $0 and would get $0 back.

So, let's add solar. You spent $20k and you get a 30% tax CREDIT. That is a reduction in the taxes owed. So, you take $6k off taxes due. But, since your tax responsibility is only $5k (and you paid it all in), you get all $5k back. But, you carry that remaining $1k over to the following year.

Fast forward 1 year. Again you make $30k with $5k in tax responsibility. You have a $1k credit carried forward from the previous year. So, when you file your taxes, since you paid exactly what you owed again, you get the remaining $1k as a refund.

It works the same way with geothermal (and other) credits too. We actually had a carryover when we built our house due to our geothermal credits.



Not really. You can't get more back than you pay in.

Thanks, that makes more sense. I read about the carryover to future years if you can't get it all in one shot.

 

[bunyip]

It is interesting seeing all of your variables from state to state, our rebate is an incentive to go solar and the government pays the installer a premium and you pay the balance, the power retailers try to make out that they encourage solar and charge us an extra 6c a kwh for what we use for the privilege, what do we get for the 6c, nothing, if our system breaks down it is our problem so we pay 39c per kwh.
The infeed started at 8c per kwh then dropped to 6c, the companies were trying for 3c but there was a great public outcry about the parasites taking advantage of what we paid for and it went up to 11.6c per kwh.
These figures are for our area and do vary depending upon which supplier you have, suppliers have their own demographic and have several retailers.
Different states have different charges and we are the highest price in the state and the second highest charges in the country, one state does not encourage solar and there are no rebates so it would be quite expensive to install which is silly with the amount of sunlight hours we have, at present we start generating at about 5.30am until 9.00pm and being summer it is nearly all blue skies.

 

[dmccarty]

NC has/used to have a 30/35% tax credit for solar which would be carried over in the following years if required to get the full amount.

The reality is that solar is still an expensive installation, I think NC required a "professional" install to get the credit which juiced up the cost, so a decent sized system was going to costs tens of thousands of dollars. One will have to be able to get a fairly sizable loan or have the cash to pay for the installation and possibly wait for years to get the various tax credits. Not something many people can afford.

I have been following solar for decades and it has gotten to the point of affordability in some cases. A few years ago I went to a solar power class and it was funny watching people in the class when they realized that just having solar panels on their roof was not going to do squat during a power outage. When they saw the cost of batteries, both the initial cost and the long term cost, their enthusiasm for PV went right out the door or should I say roof. I cannot remember the details for NC, but the way the power company pays for solar power made it not worth your money to build a solar system that produced more power than you used. Basically what you wanted to do was to figure out how much power you used each day and build a system to meet that usage. Any extra power you produced went to Duke Power for free. The class instructor had built quite a few homes with PV and solar water heating and the latest power regulations and adminstrative hoops meant you just wanted to produce a power that just barely met your needs. This obviously depends on a states regulations which can change for better or worse.

Later,
Dan

 

[deezler]

I have been following solar for decades and it has gotten to the point of affordability in some cases. A few years ago I went to a solar power class and it was funny watching people in the class when they realized that just having solar panels on their roof was not going to do squat during a power outage. When they saw the cost of batteries, both the initial cost and the long term cost, their enthusiasm for PV went right out the door or should I say roof. I cannot remember the details for NC, but the way the power company pays for solar power made it not worth your money to build a solar system that produced more power than you used. Basically what you wanted to do was to figure out how much power you used each day and build a system to meet that usage. Any extra power you produced went to Duke Power for free. The class instructor had built quite a few homes with PV and solar water heating and the latest power regulations and adminstrative hoops meant you just wanted to produce a power that just barely met your needs.

This is true for net-metering in most states, I think. But! You get credited for over-production, it doesn't just disappear onto the grid every day (at least here in Michigan). So you over-produce in the summer and typically, under-produce in the cloudy/snowy winter. The credits get you through the winter.

When we put together our system plans we had to pull up the past year of electrical consumption and theoretically could not install a system that would produce more than that. There is a big grey zone on production estimates, though. The utility here had to approve our system design before we could connect to the grid. I think we will make a lot more power than we consume, especially in the summer time, so I look forward to getting an electric car and charging it for free.

In terms of general affordability.... yes you have to look at it as a long-term investment. You can get 10, 12, heck even 20 year loans at pretty low interest rates. No matter what state you live in, surely there are local contractors specializing in solar installations who would be glad to come give a free estimate; no harm in getting the real numbers!

 

[Garandman]

This time o year Solar is tough: have a panel on a shed to keep some OPE batteries topped off and last 3-4 days have been snow or overcast.

I don't have any batteries. As stated in the OP the power wall is an OPTION in the future for on site power storage

What a friend of mine did was to buy an obsolete data room UPS. Then he replaced the batteries with new ones.

Not real cheap but now he can run basic needs (pellet stove, computer, lights and internet) 4-8 hours until the power comes back or he has to start a generator.

He does not yet have any way to charge it from his PV system: he buys back the power.

 

[houstonscott]

I think that's not correct, from what I've read.

Call your CPA, you might find I'm right... Let me know...

 

[MossRoad]

Call your CPA, you might find I'm right... Let me know...

OK

 

[houstonscott]

OK

Think of it more like withholding, it's cash the government is holding, it's yours.