Federal Tax Credit - Solar Panels - Is my Math/thinking right?

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Good morning,

Thanks for taking the time to read this and help me wrap my head around this.

So with the recent legislation, my understanding, is that there is a 26% federal tax credit for the purchase AND installation of Solar Panels on a residential property. 

I have several apartments where my business model has been, and will continue, to include utilities with rent... thus I pay the electricity. Some of these apartments even have heat pump/heating and cooling... so the 4 cold months of New England, I get a good sized electric bill... but evens out the rest of the year with small electric bills. That said, I am considering having panels installed on the roofs of these buildings to pay the electric for these units, and in RI we have net metering, so I guess, if there is excess, it goes back to the grid and I get credited.

So let's get to the math:

Let's say, for easy math, an array costs $50,000 installed ( I know it may be higher - again easy math).

To start, I can write off 87% of the cost of the array (my understanding is that you can write off the full cost MINUS 1/2 of the tax credit which equals 87%) which comes out to a $43,500 write off to go against net income from that LLC (which I believe is written off over several years? Or can you Bonus Depreciate Solar Panels?).

Then I get a 26% tax credit, which is equal to a $13,000 tax CREDIT for this LLC. Something very special, from my understanding, because this is a credit on my Tax Obligation. For me to write off $13,000 off of my tax obligation (different than a normal write off) and let's say I am in the 22% tax bracket, that would be comparable to $59,090 additional write off ($13,000 divided by 22%).

Is this not theoretically a $102,590 write off ($59,090 + $43,500) that is passively used to offset my tax obligations over the next several years?  a 105% return on investment?

AND I get free electricity out of it?

So, am I wrong in thinking this is not super advantageous and a no brainer?

Let me know your thoughts!

AND I get free electricity out of it?

Seems to me you paid at least $50,000 for this "free" electricity. :)

Yes, your understanding is generally correct about the tax credit and the bonus depreciation.  However, if the rental is a passive activity you might not benefit immediately from driving a passive loss further negative.

As far as: this is not super advantageous and a no brainer?

There's no general yes or no answer to this question. Have you run an IRR calc or discounted cash flows on the initial cash outlay and discounted future cash flows? Could you make a better return elsewhere on $50k of cash?