For those who live in Los Angeles and may be interested in installing solar systems on their property, you may be eligible for some incentives. If you have a federal income tax liability, the cost of your solar system can be used as a deduction in your taxes. Los Angeles residents are eligible for a federal solar tax credit of up to 26%. You can claim the 26% federal solar tax credit whether you spend $10,000 or $1,000,000, as there is no maximum limit.
In addition, the solar tax credit can be split over multiple years or all at once. For example, if your solar systems cost $10,000, the 26% tax credit is $2,600, and you owe $2,000 in taxes, your taxes will be reduced to $0, and the remaining will be reduced from the following year’s taxes. The year you can claim your solar tax credit depends on the date your solar systems were approved.
In a order to be eligible for a solar tax credit for residential homes, you have to meet some requirements:
- The solar system must be approved, and provide energy to your home
- Fire and electrical code requirements need to be met
- Need to have ownership of solar systems, as leasing solar systems does not qualify you for a solar tax credit
If you are installing solar water heating, you have to meet additional requirements:
- 50% of energy used to heat water must come from solar systems
- Tax credit applies only to water used within the property
- Must be certified by the SRCC (Solar Rating Certification Corporation)
On top of that, if you are interested in installing a solar battery backup for your property, you will also be eligible for a solar tax credit.
When it is time to file your taxes, be sure to accurately fill in and complete the appropriate form for your federal solar tax credit—Form 5965 (Federal Residential Energy Credits) and include it with your tax submission.