When you purchase your solar system, you may be eligible for a Solar Tax Credit for up to 30% of your project cost, plus certain state tax credits and/or rebates. Sungage is the only financing option that automatically sets aside the value of these combined solar incentives into a Deferred Payment Portion (DPP) to lower your initial monthly payment. Depending on the timing of your project, it could be as much as 18 months before any payments on the DPP principal are due.
The remainder of your loan is the Monthly Payment Portion (MPP), which includes principal & interest and may include interest on the deferred portion. MPP payments start approximately 60 days after installation of your solar project is confirmed.
When tax season comes, if you have enough tax liability to deduct the solar credits, you’ll reduce the amount of taxes you owe. You may decide to use your tax savings to pay off the Deferred Payment Portion when it’s due. If the DPP is paid when due, the monthly payment amount for your solar loan stays the same. If it is not paid when due, the monthly payment amount will increase accordingly, but there will never be any extra fees or rate changes as a result.
The ITC is currently calculated as 30% of the net cost of the solar system (excluding state and local subsidies). Batteries can be included.
Tax credits provide a dollar-for-dollar reduction of your income tax liability. For example, a $1,000 tax credit saves you $1,000 in taxes.
In contrast, a tax deduction lowers your taxable income. For example, if you are in the 25% tax bracket, a $1,000 tax deduction saves you $250.
Homeowners do need to have tax liability.
Some homeowners may not pay enough taxes to take advantage of the entire credit. Unused portions often may be carried forward to the next tax year.
Certain tax circumstances may prevent the use of credit (e.g., alternative minimum tax).
Note: Sungage Financial does not provide tax advice.This information has been prepared for informational purposes only and is not intended to provide and should not be relied on for tax advice. You should consult your personal tax advisor about whether you have enough tax liability to benefit from the solar tax credit before entering any transaction. Not all customers have enough tax liability to benefit from the solar tax credit.
For more information on solar tax credits or the Sungage Solar Loan, please feel free to call us anytime at 844-SUNGAGE (786-4243) or use our live chat.