DBK CORPORATION
"The Energy Family - Low Cost Electricity"
DBK SOLAR DIVISION
1-(619) 692-2145
Frequently Asked Questions on the New
Federal Solar Tax Credits
This FAQ sheet should answer many of the questions facing companies in the
solar energy industry about the federal solar tax credits. While we have to be
very clear that DBK cannot offer you tax advice, which can ultimately only come
from your tax professional , this document
should provide some initial guidance based on the legislative text.
Business Credit vs. Residential Credit
| Old Incentives | New Incentives | Credit Window | Cap | Eligible Technologies | |
| Business Credit | 10% | 30% | 1/1/06 - 12/31/08 at 30%; reverts to permanent 10% thereafter |
No Cap | PV, CSP, solar hybrid lighting, solar domestic water heating (excluding pool heating) |
| Residence Credit | None | 30% | 1/1/06 - 12/31/08 |
$2,000 per system/ for each solar technology |
PV, solar domestic water heating (excluding pool heating) |
1. What are the dates of the credit? Is it
applicable to existing systems?
The credits become available for systems that are "placed in service" - activated between January 1, 2006, and December 31, 2008. If the installation is on a new home, the "placed in service" date is the date of occupancy by the homeowner.
Systems that have already been installed are not eligible.
2. What about systems that have been purchased
but not installed?
Should you sell / buy a system and even start work this year, but do not
complete "original installation" of the system or "place it in service" until
Jan. 1, it will qualify for the credit.
3. Can this credit be applied to capacity additions?
(i.e. I have a 1.5 kW system and I want to add 1.5 kW more.) Similarly, can I
apply this credit to used equipment going into a new installation?
This
is not entirely clear at present. However, the language would suggest that both
scenarios are allowed - the credits apply to the amount of expenditure on solar
energy property in a given year. DBK Solar will work to develop
regulations favorable to the solar industry. We will pass on additional
information as it becomes available.
4. How does the residential cap on expenditures operate?
An individual can take the 30% credit up to a $2,000 cap for photovoltaics,
while also taking the credit up to a separate $2,000 cap for solar water
heating. The credit may be carried over to future years. Business entities have
no cap on the total credit amount, provided they have a sufficient tax
liability. Businesses have 2 years in which to take the credit.
5. How does the credit work with existing state
credits or utility incentives?
The
credit applies to the basis remaining after any state or utility incentives
available to the taxpayer have been taken.
Example: a $10,000 system that receives $5,000 in state incentives would be
eligible for a $1,500 Federal credit.
6. Are there any changes to the business solar tax
credit other than percent?
The
business solar tax credit will continue to be administered as before; all
that has changed is the percentage increase to 30%. Operation and legal
technicalities of the business credit are well established. An accountant or
tax professional familiar with these rules should be able to inform you on
any specific issues.