Homeowners planning on adding solar electric panels to their home can benefit from a number of incentives. These include energy-efficient financing and tax breaks whether buying, selling, refinancing, or remodeling a home. There are also an increasing number of states and local governments that are offering residential incentives to install solar power, in addition to the 30 percent federal tax credit.
Homeowners can take advantage of energy-efficient mortgages to either finance solar power improvements to an existing home or the purchase of a new energy efficient home. The federal government supports these loans by insuring them through the Federal Housing Authority or Veterans Affairs, securing lenders against loan defaults. The FHA also allows lenders to add up to 100 percent of the cost of energy efficiency improvements to an existing mortgage. According to the Department of Energy, most financing programs encourage having a certified home energy rating consultant conduct an energy audit of the home to prove the improvements will save money on energy bills.
Federal Tax Incentives
The federal tax credits for home renewable energy projects were raised to 30 percent in 2009 and the former $2,000 cost ceiling was removed. Now the federal tax credits for home solar projects are available at 30 percent of the cost with no upper limit of the dollar amount of the total the project, including installation costs. This tax credit is available on principal and second homes, and new and existing homes as long as the solar power system is "placed in service" by December 31, 2016.
Twenty-nine states have some type of tax incentive for solar power upgrades and many of these same states also offer property or sales tax exemptions. It is not surprising that sunny states like California, Colorado and Arizona have established some of the best financial incentives to promote solar power. However, a number of other states in the Northeast, home to some of the highest residential electricity rates in the country, also have progressive incentive programs including New Jersey, New York, Maryland, and Massachusetts. Created in 1995 and funded by the U.S. Department of Energy, the Database of State Incentives for Renewables and Efficiency offers a breakdown of these state programs, as well as local, utility and federal incentives.
Some local governments offer Property Assessed Clean Energy financing that allows homeowners to pay for energy-efficient upgrades through a property tax assessment that can be repaid over 20 years. Almost half of California’s 58 counties, as well as several individual cities around the country, have PACE programs in place or in the planning stage.
- Solar energy image by lefebvre_jonathan from Fotolia.com