Americans are packing up their travel trailers, campers, and other recreational vehicles to trade a life in normal society for a life of adventure, and seclusion! It is my experience that the need to explore can only be satisfied by those places considered vast, wild, and untamed by the trappings of society. In the past, this reclusiveness came at the price of modern amenities, but not any longer. With the newest updates in solar technology, and a really SWEET Tax Credit the Modern-day Drifter can stay connected, stay employed, and be extremely comfortable while doing it!
Tax Credit
Just how sweet is the tax credit? If you qualify, it’s the exact same credit that you’ll get if you put solar onto your primary residence! That’s right, gear up to get a 30% non-refundable tax credit for your cost for the equipment, and installation!
What exactly is a non-refundable tax credit? It’s a credit that will reduce your taxable income, but not to the point that it creates a refund. The amount of the credit, which has no maximum limit, effectively carries forward for the duration that the tax credit exists- which is 2034 currently. So the credit can offset taxes now, and in the future.
Primary & Secondary Home Installation
To further a great deal, claiming the credit on your Primary Home doesn’t exclude you from claiming it on your secondary! The only properties excluded for the credit are rentals, and commercial properties- with the personal portion of a short-term rental being an exception that could qualify.
What exactly is necessary to be considered a secondary home? The space must include a kitchen, toilet, and sleeping area which is great news for most modern campers, and mobile & tiny homes!
Finer Details
The amount of the credit is a percentage of the total improvement expense in the year of installation with no annual maximum or lifetime limit. The credit is tiered down until phasing out in 2034 unless any changes are implemented. The owner of the property must be the primary residence of that property to qualify.
2022 to 2032 the credit amount is 30%
2033 the credit amount is 26%
2034 the credit amount is 24%
Taxpayers will file Form 5695 to claim the credit on their Tax Return.
State Credits
Many states have a form of incentive for solar energy. The State of Colorado, where I live, does not currently have any solar incentives, however, some local municipalities may offer incentives in the form of county property & sales tax credits or rebates. Be sure to check with your local municipality to see what’s available.
Things to Note
Operating a Business
Per the IRS, If you operate a business out of your home the solar credit can be claimed in full if the use of the qualified property for business purposes is not more than 20%. If the percentage is higher the taxpayer may still claim the credit on the qualified property, but on a prorated basis based on business use percentage.
Tax Planning
In years when higher income levels are expected, the investment in solar can play a bigger role in tax savings! Through proper planning you may not only reduce your tax burden during higher earnings, but it may be possible to keep yourself out of a higher tax bracket- and that, My Friends, is where the magic happens!
So go forth to be free & productive in a place that fits your wondering fancy. But before you do, be sure to check out my other blogs, HERE, where I discuss tax topics that matter. If you’re interested in our services, please book an appointment through one of the links below. We’d love a shot at your business!
Book a Free Discovery Appointment
See if Rangeview Tax & Accounting is a good fit for you with a Free Discovery Chat! We offer in-person, on-site, and telephone discovery chats. On site chats are typically business with exceptions available under appropriate circumstances for individuals.
Book a Paid Consultation
Our paid consultation is $100 and puts you on the line with a tax professional who will answer questions that you have related to IRS Code, and Tax Strategies. Pay for your consultation, select one of the available appointments, and provide the general topic of discussion or questions that you wish to discuss.
Tax Projections
Stay on top of the upcoming filing season with a tax projection! We will collect various data including current pay stubs, expected business income, and more extraordinary situations like selling a home, rental, or business. From there we annualize the figures and run a mock tax return to get a good idea of an expected tax liability. This gives us a baseline in which we can further advise tax planning strategies that may apply.
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