Knock $4,000 off your taxes for going solar
Forbes is reporting the under the new energy laws, homeowners can receive up to $4000 in tax credit for installing solar energy system. Congress authorized the solar credits for only two years — from Jan. 1, 2006 through Dec. 31, 2007. Homeowners can put in a photovoltaic system and/or a solar-powered hot water system, and get a federal tax credit worth 30% of the systems’ cost, up to a credit of $2,000 per system. There are a couple of catches: The heating system can’t be for a pool or hot tub, and the federal credit applies to the net system cost after any state incentives.
The good part is that this new federal break is a credit — not a deduction — meaning it reduces your tax bill directly, dollar for dollar. So, if you install both eligible solar systems in your house, you can knock $4,000 off your federal tax bill. And if you have more credit than you owe in tax, you can carry it over and use it to defray next year’s federal tax bill.
