The major PACE finance company is Renew Financial, with whom you can expect:
The ITC applies to both residential and business solar systems.
- The credit is applied to taxes owed in the amount of 26% (until 2022) of the solar installation’s net cost.
- Installation costs include the system, labor, fees, batteries, taxes, and certain remediation costs to install the system (e.g., main electrical panel upgrade, roof repairs, or cool roof installation).
- Any incentives (utility, state, or other) need to be deducted to arrive at the net cost.
- There is 26% credit for systems until 2022. After that it will go down to 22% for 2023 and thereafter it will be eliminated unless Congress renews it.
- ITC is a credit and not a deduction. Therefore, it is worth dollar for dollar.
- The credit is not income, so you do not owe tax on it.
- You need to owe at least the same amount of tax to take advantage of ITC. You can carry it over to subsequent years.
- If you are the primary owner for multiple homes, then credit needs to be pro-rated for each home and based on the amount of time you live in each home.
- There is no limit to the credit.
To conclude, if you are eligible for any state solar incentive program, then the system purchase is the best out of all solar system financing options. Otherwise, in the case of a lease or PPA, the solar module company owns the panels and receives the tax incentives from the government.
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