Cost Benefits
Federal Tax Incentives
Your Sunward Solar Hot Water System, including shipping and installation, qualifies for a 30% Federal Tax Credit, putting thousands of dollars back in your pocket in its first year. There are also additional financial incentives and credits available in many states.
Studies have even shown that home values increase dramatically with the installation of a solar hot water system. For example, a $150,000 home can appreciate by up to $10,000 instantly with the installation of a Sunward Solar Hot Water System! Add up the savings, and it’s no wonder experts agree that solar hot water is one of the best investments you can make for your home!
Frequently Asked Questions:
What is the Residential Renewable Energy Tax Credit?
A renewable energy incentive that entitles you to a federal tax credit equal to 30% of the cost of a Sunward System for the year your system becomes operational. (If you complete installation in 2010, your tax return is due by 4/15/2011). Unlike a “tax deduction” which merely reduces your taxable income, a “tax credit” is a dollar-for-dollar savings on the taxes you owe the federal government.
Does the 30% tax credit apply to the cost of installation labor?
Yes, it applies to both materials (including cost of shipping) and labor.
Can you give me an example of how it works?
For simplicity, let’s say your Sunward System costs $10,000, including installation. Your tax credit would be 30% of the total, or $3,000. If your total federal tax owed before the credit were $5000 (including tax withheld from your paycheck), your tax credit would reduce your tax bill to $2000. The net cost of your system after the credit is $7,000.
What if my tax credit is greater than the taxes I owe?
While you are not entitled to a refund based on the tax credit alone, you may carry forward any unused portion of the credit and use it to offset future federal taxes until the year 2016. Example: let’s say your total federal tax owed before your $3000 credit is $2000. In this case, your tax credit would reduce your $2000 tax bill to $0, and the unused portion of the credit ($1000) would be applied to future tax returns.
If I receive a credit from my state or local government, does that decrease my federal tax credit?
No, the basis for your federal credit is the total cost of the system, regardless of other state or local incentives you may receive (please see over for information on additional incentives in your state).
What’s not covered by the credit?
The tax credit does not apply to solar water-heating for swimming pools or hot tubs.
What form do I use to claim my 30% federal tax credit?
IRS Form 5695 (“Residential Energy Credits”).
Does any solar hot water system qualify for this tax credit?
No. In order to qualify, systems must be certified by the SRCC (Solar Rating and Certification Corporation). The Sunward System is SRCC certified.
view SRCC Certification