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Federal Solar Tax Credit to Decrease in 2021
Homeowners in Sacramento, California and across Northern California have enjoyed a 26% federal solar tax credit throughout 2020, and this number is set to drop in 2021.
The Federal Solar Income Tax Credit, will decrease to only 22%, and at the time of this writing it will expire completely by 2022.
As we covered in a previous blog article, this credit allows homeowners to claim a tax credit that will help offset the cost of their home solar system significantly.
VEVO Electric customers who finance a solar system can use this tax rebate as a deferred down payment on their loan. This deferred down payment counts as a Zero interest portion of the loan!
Additionally, if you’d prefer to keep this 26%, you can take the cash and use one of our loans with interest rates as low as 0.99%.
At VEVO we will let you know if your installation can be completed by December 31 or not – but act fast! The tax credit is decreasing in a few weeks, so time is of the essence.
We at VEVO Electric are not tax advisors, and anything in this article is not Financial Advice. Consult a tax professional to confirm your potential savings.
How to Choose the Best Sacramento Home Solar Company for Your Unique Situation
Finding the perfect company to set you up with your home solar system can be a big challenge. Follow the steps in this article to make the right choice.
With so many companies selling solar these days, how do you choose?
Many homeowners feel nervous or uncertain about this choice, in part because solar technology is not well understood by most people. Instead of getting pressured into going with the company with a smooth talking salesman, take your time to make the right decision for you.
Here are four areas to consider when looking for a solar company:
- Price and Financing Opportunities
- Quality, Reviews, and Warranties
- Own, Lease or PPA Agreement
- Customer Service
Price and Financing Opportunities
If you have the financial position to do so, buying your system outright is always going to be the easiest option. You can own your system outright, still get the 26% federal tax credit (at the time of this writing, 9/6/2020), and wipe out huge amount of your electricity bill (if not the entire thing).
Many homeowners are looking to finance a system. If you are considering financing, consider who the financing is offered through, and the reputation of that bank. It will also be a better experience for you if the lender has specific experience in the solar industry.
When you are looking at the interest rates offered, look at the total price of the system and the monthly payments, instead of fixating on the interest rate.
Some companies offer low interest rate, but your payments increase by 2-5% every year. This makes the initial payment look low, but in actuality you may end up paying much more over the course of the loan.
Many homeowners in Northern California or the greater Sacramento area are able to finance a solar system for significantly less money per month than they were previously paying for electricity.
If you home is in this situation, it’s a no-brainer, because you own the solar system, and one it’s paid off, you will own 100% of the production.
Quality, Reviews, and Warranties
Since a solar system is a multi-decade investment, the premium of a job well done can not be under emphasized. Your solar company should pay close attention to the details of each and every project they are involved with.
It’s better to build a lasting relationship with a company that cares about your satisfaction – and in some cases that is willing to guarantee it.
You should check reviews, but be wary of putting too much stock into reviews. Look into the company and see if they are offering a warranty on their system or their components.
Own, Lease, or PPA Agreement
The biggest solar installers, usually don’t want to sell you a solar system, instead they want you to either get on a solar lease or a Power Purchase Agreement.
Projects like these give more money back to the company, and less money back to you. You should check if the lease agreement includes an escalator clause that automatically raises your rate every year.
Many of the largest national installers have poor reviews, and some have even faced lawsuits by state governments.
This is a topic that could be discussed in much more depth, but it is important to stress that we believe you are better off owning your system outright. Do your own research, but you will find that most if not all agree with us.
Customer Service
When it’s all said and done, customer service means peace of mind. It means knowing that you are taken care of, if you need to talk to someone, you know how to reach them and you know they’ll be responsive.
This is something that all companies say they do very well, but you can only truly know by being in business with them. At VEVO Electric, we treat each home owner as an individual, and pay close attention to their needs and concerns, to make sure they are a happy customer at every step of the way.
We are a local company, proudly serving the Great Sacramento area, and have been helping homeowners with successful electrical projects for over 35 years.
Can Rooftop Solar Help California Keep the Lights On?
California crossed a major milestone last year – it has over 1 million solar systems. Primarily these are rooftop installations.
The appetite for rooftop solar has not been slowing down, in fact it’s been increasing in 2020 as more and more homeowners want to take control of their energy production and be less reliant on energy companies.
However, unless you have a battery system, you’re still at the mercy of PG&E when it comes to rolling blackouts or emergency power safety shutoffs.
During this most recent heat wave, some pundits blamed California’s investment in solar energy as a reason for the rolling blackouts (looking at you, Wall Street Journal).
They’re not totally wrong, even though the president of California’s power grid operator, Stephen Berberich, dismissed the criticisms and said renewable energy wasn’t to blame for the outages.
Regardless of who’s to blame, it’s clear that California needs a new approach to energy generation and management in order to thrive through the 2020s and beyond.
One such approach is to allow rooftop solar homeowners to store energy in batteries, and in select moments sell that energy back to the power grid for a premium price.
“It takes the Flex Alert and puts it on speed”, said Bernadette Del Chairo, executive director of the California Solar and Storage Association, a trade group. “It’s not just, ‘Turn off your lights and set your thermostate to 78’. It’s do those things and give us 5 kilowatt-hours from your batter in your garage. And we’ll pay you for it”
While battery technology has remained lackluster in quality and prohibitively expensive for some homeowners, it is expected to improve significantly in the next 5 years.
For California, home solar and battery storage may become a key piece of keeping the lights on for years to come.
How to Take Full Advantage of Solar Tax Credits in Sacramento California
With the days warming up, and utility companies increasing their rates (on June 1 – SMUD went to $0.29 kWh between 5 and 8pm), more and more homeowners and commercial real estate owners are turning to solar energy to save money by generating their own power.
There has never been a better time to go solar, as the Federal Investment Tax Credit will decrease at the end of 2020. It’s currently at 26% – meaning that you will only have to pay for 74% of the total price of your solar system.
As long as you own your solar system, you are eligible for the Federal Investment Tax Credit. If you lease or sign a PPA with an independent solar installer, you would not be eligible for the tax credit.
If you need cash flow or tax relief, you can take the tax credit and enjoy it. But, if you don’t need to tax break, and you’d like to get an even better deal on the financing your solar system, we offer a special deal with our partner Sungage Financial.
Through our Deferred Down Payment option, you can use the tax credit as a down payment that you don’t have to pay until after you get the tax credit (June the year following your solar installation).
From a finance perspective, this means you can pay zero interest on 26% of your entire solar system! If your system costs $10,000, your tax credit would be $2,600. Using this as a deferred down payment, your total loan would only be for $7,400. This means you only pay interest on 74% of the total bill.
Don’t want to use the full tax credit as a down payment?
That’s fine! We can put a portion towards it, any amount you choose.
Not sure if you want to tax the cash or use it as a down payment?
You can change your mind and take the cash without any penalties or fees, your monthly rate will go up proportionately and fairly.
It’s a no brainer! To learn more about taking full advantage of solar tax credits in Sacramento, California, call VEVO Electric today, we are happy to tell you how much you can save with solar.
VEVO Electric and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.