If you are thinking of getting home solar power in 2009, then the good news is that the number of federal and state incentives for having an energy efficient home has never been greater. The bad, of course, is that many of us are strapped for cash or home equity in our weak economic climate.
Last year’s volatile energy market saw oil prices rising and falling almost daily, which led to many people turning to alternative sources to heat and power their homes. And to help increase the interest in renewable energy, Congress extended and expanded federal tax benefits in October 2008, with various new provisions set to take effect in January 2009.
The most generous of the new provisions is a federal tax credit for home solar power systems. Until now, the tax credit for home solar power was restricted to $2,000. But starting January 1, households can claim the full 30% of the installation costs for new home solar power, with no limit. And if you live in a state with its own tax rebates, such as New York, New Jersey, Connecticut or California, the state will contribute thousands of dollars towards your installation costs.
According to the CEO of Akeena Solar Inc., Barry Cinnamon, “A 3 kilowatt rooftop home solar power system in California will cost around $24,000. State rebates would be about $5,000, plus a 30% federal tax credit on the remaining $19,000, would bring the installation cost down to $13,300,” he said. That is almost half the initial cost!
He further went on to say, “Now you’re into a 6 and a half year payback period (for savings in energy costs), even if electricity costs stay the same. The economics have never been better.” But he added, “Commercial and residential customers don’t have the money to borrow right now.”
A new feature in 2009, is that home solar power owners can claim their tax credits against the alternative minimum tax. This will help taxpayers who have many itemized deductions and tax credits to enjoy the full value of the renewable energy tax credits. This is where planning is essential to ensure that you have enough tax liability to completely offset the home solar power tax credit. But a nice feature is that any unused solar tax credits can be carried forward to the next tax year.
And when it comes to passive solar design, where you make improvements to better trap heat or cool the air in your home, you can get an energy efficiency tax credit of 10% of the cost of adding insulation, or replacing the windows and outside doors – but this is capped at $500.
However, if you made such improvements in the 2008 tax year, you are out of luck. Congress’s renewed tax credit only applies from January 1, 2009 until December 31, 2009. But more tax credits seem to be in the pipeline as renewable energy sources are expected to benefit from President-elect Obama’s energy policies.
Video On Obama Addressing Climate Change:
Nonetheless, “Where the economics make sense, homeowners would be well-served to move ahead with energy improvements now instead of waiting to get a little more from Uncle Sam,” said Mr Nadel of the American Council for an Energy-Efficient Economy. So if you have been putting it off, then it seems now is the time to invest in home solar power.
Originally posted 2009-01-13 11:40:05.