Implementing a solar system in New Jersey can tremendously reduce your electricity bills while providing you with multiple financial incentives. However, there is often an upfront cost required to install solar panels in New Jersey. Here are some ways to reduce these costs:
Take Advantage of the Tax Benefits
As long as you own your solar energy system (even through a solar loan), you can qualify for the following tax benefits:
Federal Solar Tax Credit (ITC)
The Federal Solar Tax Credit or also termed as the Solar Investment Tax Credit (ITC), is a 22% deduction to system costs. This is a dollar for dollar tax credit off of the site owner or business’ federal income taxes. It is important to note that the 22% tax credit will shrink to 10% starting in2022 for commercial projects, and will go away altogether for residential projects. Exemption of Sales Tax
Another vital tax benefit you could take advantage of is the sales tax exemption for solar system purchases. Solar sales tax exemptions aim to help NJ residents reduce the upfront costs of going solar. The Garden State offers a full sales tax exemption for all the components that make up a solar system. This law means that the machinery for solar arrays, inverters, and solar panels are eligible for tax exemption.
Property Tax Exemption
Another tax benefit that can reduce the hefty costs of going solar is the property tax exemption. Property tax exemptions are available for both businesses and residents of New Jersey to exclude the added value of the solar system from the cost of property tax. This exclusion makes it easier for NJ residents to perform solar installations to add value to their homes without worrying about the added tax. Based on the NJ legislation, the solar system is exempt from property taxes if it meets the on-site electricity, heating, and energy generation requirements.
There are two popular options to help NJ homeowners lower residential solar panels’ cost if you are looking for financing. It is essential that you consider these financing options since going solar can often require upfront costs. Explore these options to know which ones would work best for your situation.
The homeowner or business owner owns the solar system.. Lenders for solar loans can be banks, credit unions, state programs, utility companies, solar developers, or other solar financing companies.
Solar loans allow New Jersey businesses and homeowners to jumpstart solar installations even though they cannot afford the upfront costs. They own the solar system, but you can be subject to interest on solar loans held by a lender, however in most cases, the borrower will be cash flow positive due to the tax credit, energy savings, and NJ’s incentive – the TREC. You can acquire solar loans from different sources. These sources include banks, credit unions, state programs, utility companies, solar developers, and financing companies specializing in solar loans. Most solar contractors will provide their solar loans which makes it easy and takes away the work of finding the funding for the solar project.
Solar leasing allows NJ homeowners to enjoy immediate electricity savings every month. For a fixed monthly rate, you can have a solar system provided by the solar provider. They are the ones who take care of the maintenance and repair for you. However, you cannot enjoy the tax benefits and state incentives as a partial owner.
Solar leases get used interchangeably with the term “Power Purchase Agreement” (PPA). With PPA, the slight difference involves the amount of money that you pay. The standard lease requires you to pay based on the value of the solar array, similar to a car lease.. In this option, you pay the same amount every month although in some cases you may be subject to an annual escalator. In contrast, PPAs allow you to pay for the electricity produced by the solar at a predetermined rate.
Whether you are financing your solar, leasing your solar, or purchasing your solar outright, there is always a path to save money and potentially reduce upfront costs.
For more information, please visit Green Power Energy.