Ready to save some serious cash on your solar system? This article discusses how to apply for solar tax incentives – the programs that help keep money in your pocket and make your switch to solar more affordable. 

In a previous blog post, we went over federal, New York state, and NYC local incentives in great detail–so if you haven’t seen it yet, check it out before you apply. You can also watch a video on the topic here.

Now, here comes the fun part–applying those savings to your installation.

Review of Federal and New York State Solar Tax Incentives

Federal Solar Incentives

At the federal level, you may qualify for a 30 percent non-refundable tax credit. There aren’t annual or lifetime limits to this credit and any excess can be applied to your taxes in future years. If you’re a US homeowner, now is the perfect time to take advantage of this credit as the percentage will drop in 2033 and again in 2034.

New York State Solar Incentives

At the state level, incentives look slightly different. In this article, we’re chatting about incentives in New York State since that’s where we’re located. 

New York homeowners might qualify for a non-fundable, 25 percent tax credit which is limited to 5,000 dollars and can be carried over for up to five years.

For qualifying New York state residents, the Real Property Tax Exemption ensures that property taxes will not increase with the installation of solar panels, even if the property value rises.

Finally, New York City residents may qualify for the Real Property Tax Abatement program. For residents of NYC, this program takes the place of the Real Property tax abatement and lessens the amount of property taxes owed. For up to four years, NYC residents can take advantage of a 7.5 percent abatement, an abatement equal to the amount of your annual property taxes, or 62,500 dollars – whichever number is lowest.

How to Claim Your Federal Solar Tax Incentive

First, here’s a quick reminder of the qualifications:

1. Your property must be located in the US.
2. The incentive only applies to the home you live in the majority of the time.
3. The incentive can only be applied to new, qualifying energy properties like solar electric panels among others.

If you check those three boxes, you should be good to go!

After your solar panels are installed, you’ll need to gather and hold onto necessary documents like installation records and purchase receipts. This documentation does not need to be filed with your tax return, but according to the IRS, may be required if your tax return is audited. You will also need to provide these documents if you eventually sell your property.

When your documents are secured, you’ll need to file Form 5965 with your tax return. Keep in mind that this form must be filed for the year that your solar panels were installed to receive the credit.

How to Claim Your New York State Solar Tax Incentive(s)

The New York Tax Credit

To receive this credit, your system must use solar radiation to produce energy and it must be installed at your main home in New York state. You’ll qualify for this credit whether you purchase, lease, or enter into a 10 plus years purchase of power agreement. That’s it!

To claim this incentive, you’ll need to file form IT-255 with your taxes.

The New York Real Property Tax Exemption and Abatement Programs

New Yorkers outside of New York City can enjoy the perks of the New York Real Property Tax Exemption. To ensure that your property taxes do not go up even if a solar installation increases your property value, you’ll need to file form RP-487. Unlike the other incentive forms that can be filed with your tax return, this form must be filed with your local property assessor.

New York City residents can qualify for the Real Tax Abatement program in place of the tax exemption we just discussed. To take advantage of this program, you should discuss the submission process with your installer. In most cases, they’ll submit the appropriate forms on your behalf.

In the case you need to submit the paperwork yourself, you must do so within the year that your solar system is installed. The NYC Department of Buildings provides a detailed instruction manual for filing this paperwork. While following the instructions, you’ll need to fill out the PTA4 form and, once completed, file it with the Department of buildings. They’ll be the ones to approve your application and the Department of Finance will provide the benefit to you.

Shedding Light

That was a lot of information for a lot of money back in your wallet! Ready to save some serious money by going solar? Contact us today.