{"id":22266,"date":"2019-06-10T05:00:19","date_gmt":"2019-06-10T12:00:19","guid":{"rendered":"https:\/\/www.yardi.com\/blog\/?p=22266"},"modified":"2020-12-25T03:15:10","modified_gmt":"2020-12-25T11:15:10","slug":"sunset-on-solar-itc","status":"publish","type":"post","link":"https:\/\/www.yardi.com\/blog\/sunset-on-solar-itc\/","title":{"rendered":"Sunset on Solar ITC"},"content":{"rendered":"<p>This is the last year that businesses are eligible for the 30 percent federal investment tax credit (ITC) for solar\u2014sort of. A few simple steps can position businesses take advantage of the solar ITC before step downs begin next year.<img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-22267\" src=\"https:\/\/www.yardi.com\/blog\/wp-content\/uploads\/sites\/15\/2019\/05\/Yardi-Blog-Energy-Solar-Tax-Credit-w-Ray-Segars-300x200.jpg\" alt=\"\" width=\"350\" height=\"233\" \/><\/p>\n<p><strong>The Tax Benefit Step Down<\/strong><\/p>\n<p>Tax benefits have motivated sustainable upgrades over the past ten years. The 30 percent ITC was the most popular. The ITC \u201cprovides owners of solar systems with the ability to offset tax payments owed to the IRS in an amount equal to 30 percent of the eligible cost basis of a solar photovoltaic system,\u201d <a href=\"https:\/\/www.smartenergydecisions.com\/blog\/2019\/04\/16\/solar-tax-credits-are-stepping-down-next-year-what-does-this-mean-for-corporate-solar-projects?contact_id=118261\" target=\"_blank\" rel=\"noopener noreferrer\">summarizes Smart Energy Decisions<\/a><em>.<\/em><\/p>\n<p>Beginning in 2020, however, the tax benefit will gradually decrease. The first step decline is to 26 percent for projects that \u201cbegin construction\u201d in 2020. In 2021, the benefit declines to 22 percent. All projects starting in or after 2022 receive only 10 percent.<\/p>\n<p>\u201cThe good news is that there is currently a 30 percent ITC for the cost of the system for those installing solar before December 31st, 2019,\u201d emphasized Ray Segars, CEM, consultant for energy and sustainability on Yardi&#8217;s energy team.<\/p>\n<p>He added, \u201cThe emphasis is on credit. This is a credit not a tax deduction. Tax deductions reduce taxable income, thus reducing associated taxes. Tax credits are more valuable because they reduce the actual tax bill dollar for dollar.\u201d<\/p>\n<p><strong>Gaining the Advantage on the Solar ITC<\/strong><\/p>\n<p>Notice 2018-59 details strategies to help corporations navigate the step downs with financial finesse.<\/p>\n<p>Firstly, \u201cbeginning construction\u201d is a surprisingly loose term. \u00a0There are two ways that a project may begin and still qualify for the year\u2019s tax benefit.<\/p>\n<ul>\n<li>The Physical Work Test entails beginning physical work on your solar project<\/li>\n<li>The Five Percent Test entails paying or incurring 5 percent or more of the total cost of the solar project<\/li>\n<\/ul>\n<p>For the latter, a client may make a deal with a solar developer that cannot finish the job in 2019. Perhaps the solar developer may not get the solar panels in time due to a backlog of orders. As long as the client pays for at least 5 percent of the cost, the 30 percent ITC is preserved.<\/p>\n<p>\u201cActual costs that could be incurred that easily exceed 5 percent of the cost include items such as system design and engineering, site acquisition and array infrastructure,\u201d said Segars.<\/p>\n<p>Projects must also make \u201ccontinuous progress\u201d and reach completion before 2023. <a href=\"https:\/\/www.irs.gov\/pub\/irs-drop\/n-18-59.pdf\" target=\"_blank\" rel=\"noopener noreferrer\">Read Notice 2018-59<\/a> for full details.<\/p>\n<p>To reap the greatest return for your solar project, begin planning your project now to receive the 30 percent ITC. Yardi can help you get started.<\/p>\n<p>\u201cYardi energy analysts and consultants can help clients determine if these economic incentives make a solar system financially beneficial for clients,\u201d said Segars. \u201cSolar systems create many economic and environmental benefits. In addition to the tax credit detailed above, they generate electricity that can offset energy purchased from the grid. They could earn other incentives such as grants and utility rebates. They can also qualify for tax deductions and most importantly they help the environment by reducing greenhouse gasses.\u201d<\/p>\n<p><a href=\"https:\/\/www.yardi.com\/about-us\/request-information\/?rp=57472\" target=\"_blank\" rel=\"noopener noreferrer\">Contact Yardi<\/a> to take your first steps towards greater efficiencies, cost savings, and the 30 percent ITC.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This is the last year that businesses are eligible for the 30 percent federal investment tax credit (ITC) for solar\u2014sort of. A few simple steps can position businesses take advantage of the solar ITC before step downs begin next year. The Tax Benefit Step Down Tax benefits have motivated sustainable upgrades over the past ten [&hellip;]<\/p>\n","protected":false},"author":440,"featured_media":22267,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_s2mail":"yes","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2472,4],"tags":[2683,1537,1675,2559,1946],"class_list":["post-22266","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-energy","category-news","tag-investment-tax-credit","tag-solar-energy","tag-yardi-energy","tag-yardi-pulse","tag-yardi-smart-energy-suite"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v24.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Yardi Blog<\/title>\n<meta name=\"description\" content=\"This is the last year that businesses are eligible for the 30 percent federal investment tax credit (ITC) for solar\u2014sort of. 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