It is only an example cost to make you understand easily. However, according to Energy Sage gross cost of installing a solar panel system in 2021 is $16,860, and you can claim $4,618 as a tax credit which is an excellent relief for homeowners.
What property is Qualified for a tax credit?
You do not necessarily be a homeowner to claim a tax credit. However, if you are one of the following persons who have properties where they have installed solar panels, you are eligible for the tax credit.
- House owner
- Houseboat owner
- Mobile homeowner
- Cooperative apartment owner
- Condominium owner
- A homeowner that conforms to Federal Manufactured Home Construction and Safety Standards
But if you are a renter where a landlord has installed the solar system, you are not eligible for a tax credit.
What costs are eligible for tax credit while calculating the total installation cost for a solar system?
- Solar-powered components that produce electricity or heat water
- Geothermal heat pumps
- Small wind turbines
- Fuel cell property (limit $500 for each half kilowatt of capacity)
- Solar-electric collecting roofs and roof products
- Solar power storage equipment like UPS
- Some installation and labor costs
Solar equipment used to heat the swimming pool or hot tub is not eligible for the tax credit. Similarly, if you buy a solar system on a lease, you cannot get the tax credit.
You cannot claim a tax credit for rented property. However, if you also live in that house for a part of a tax year and only rent out when going away. Then, you can claim tax credit only for those days when you live in the house.