The New Federal ITC (Investment Tax Credit) along with your Local State Rebates is like getting your PV System for HALF PRICE if you act quickly.

What is the federal Investment Tax Credit (ITC)?
The Investment Tax Credit (ITC) reduces federal income taxes for qualified tax-paying owners based on capital investment in renewable energy projects. Investment tax credits, earned when the capital equipment is placed into service, help offset upfront investments in renewable energy projects and provide an economic incentive to develop and deploy more capital-intensive renewable energy technologies, such as solar photovoltaic systems and fuel cells.

What is the Production Tax Credit (PTC)?
The Production Tax Credit (PTC) reduces the federal income taxes of qualified tax-paying owners of renewable energy projects based on the electrical output of renewable energy facilities. Each kilowatt-hour (kWh) generated by an eligible facility and supplied to the electricity grid reduces the amount of federal income tax owed, which provides an economic incentive to develop and deploy technologies that harness renewable resources, such as wind, biomass, and geothermal energy.

When will the new Solar Investment Tax Credit go into in effect?
The new ITC will apply to projects placed into service between January 1, 2009 and December 31, 2016. The new rules for the ITC will not be retroactive, so the restrictions on residential installations will remain in effect through 2008.

Was the $2,000 cap not lifted for residential solar water heating projects?
No, although the House and Senate staff agreed to lift the $2,000 cap for solar water heating projects, members of the Solar Thermal Division of SEIA voted overwhelming to maintain the cap.

What about wind?
The wind industry only receives a one year extension of the PTC, which does not provide the long-term certainty some investors may have looked for.

How did the commercial Solar Investment Tax Credit change?
Utilities along with all other businesses will now be eligible to claim the 30 percent ITC.

What is the effective date for allowance of the solar ITC against the AMT?
The provision allowing individual taxpayers to use the solar ITC against AMT liability is effective for taxable years beginning after December 31, 2007. Thus, individual taxpayers who are required to pay alternative minimum tax liability (rather than regular tax liability) for the 2008 tax year may take a credit of up to $2,000 (the maximum credit amount for solar residential property placed in service during 2008) against the AMT liability. For the 2009 tax year, filers will be eligible to apply the full 30% ITC against the AMT liability.

What happens if a homeowner can’t use the full credit in the year of installation?
Any unused portion of the residential ITC can be carried into future years.

How does the alternative minimum tax (AMT) affect the ITC?
Tax payers who claim the ITC should no longer be penalized by the AMT calculations, so AMT filers should be able to claim the full ITC.

Are there limits to the amount claimed under the PTC or ITC?
There is no maximum limit for credits claimed through the PTC and there is no maximum ITC limit for solar and geothermal technology investments. However, there is a maximum ITC incentive of $1,000/kW for fuel cell investments and a maximum ITC incentive of $200/kW for microturbine investments.

Is the funding for the Solar ITC limited to a certain number of people?
No, there are no limits on the number of taxpayers that can claim the ITC.

Have the accelerated depreciation rules for commercial projects changed?
Partly, commercial projects are still classified as 5 year property under the modified accelerated cost recovery system (MACRS). However, the 50 percent ‘bonus depreciation’ for 2008 projects is set to expire.

Is it possible to claim both the PTC and ITC?
No, companies must claim one incentive or the other. The federal PTC prohibits “double-dipping” on incentives for renewable energy projects. Additionally, companies utilizing state incentives in conjunction with the federal PTC should confirm with tax specialists that their PTC benefit is not reduced by the double-dipping provision of the federal PTC.

Can members of a homeowners association (HOA) claim the ITC for an HOA-owned system?
Yes, in most cases members of the HOA are able to claim the residential ITC in proportion to their share of the HOA’s expenses; typically a homeowner’s monthly HOA payment should be directly related to their share of the HOA’s expenses.

A complete PV system usually consists of one or more modules connected to an inverter that changes the PV's DC electricity to alternating current (AC) electricity to power your electrical devices and to be compatible with the electric utility grid.  Batteries are sometimes included in a system to provide back-up power in case of utility power outages.