Alternative Energy Tax Credits Calculated Net of Energy Sold
If you read my blog, you may already know that alternative energy tax credits are available through 2016. However, here’s what you may not know: If you are selling, or will be selling, the excess electricity generated through your new solar equipment back to the utility company, you won’t qualify for the whole tax credit.
To refresh your memory, you can claim a tax credit of up to 30% of the cost of certain alternative-energy improvements, so long as those improvements are completed prior to the end of 2016. But, if you are making more energy than you need to power your own home and selling it back to the utility company (called “net metering”), then you can only claim a tax credit of up to 30% of the cost of the equipment actually used to power your OWN home.
So if you spend $15,000 on solar panels, technically you should be able to deduct $5,000. But if a portion of your energy is being sold back to the utility company, then you will need to figure out how much of your equipment is being used to power your own home, and take the deduction based on that, which means you won’t get the whole $5,000.
Just something to keep in mind!