If you’ve been researching solar energy, you’ve might have heard the term “Safe Harbor”. If not, it’s worth getting to know what it means. That’s because establishing Safe Harbor on your solar energy system installation as soon as possible is key to getting you the most financial benefits. If you’ve been having any doubts about what Safe Harbor is, what the benefits are, or how to establish it, you have come to the right place.
To understand the importance of Safe Harbor, you should first know what the benefits to you are. Being able to establish Safe Harbor on your solar installation means that you can gain access to the solar federal tax credit 2020. This tax credit is meant to make solar energy as financially accessible as possible and can really make a difference in the affordability of your solar energy installation overall. The general premise is that you will be able to deduct part of the cost of installing you solar energy system from your federal taxes. The catch? That in order to get the most benefits from this tax credit, you need to act fast. As it stands now, the investment tax credit for solar power is at 26%, meaning that you will be able to deduct 26% of your solar energy installation cost from your taxes. This tax credit will lower to only 22% in 2021, and will unfortunately fall even lower to only 10% in 2022 and will no longer apply to those looking to get reimbursed for the cost of residential solar systems.
However, there is no need to worry! Because the IRS Safe Harbor rules solar is making it much easier to get the highest tax credit you possibly can. In order to claim the tax credit of a specific year, you do not necessarily have to complete the full installation of your solar energy system during that year. You only need to establish a level of installation that affords you Safe Harbor. Safe Harbor is essentially being able to prove that you have put enough work into starting your solar energy system installation to have access to the tax credit of the year you started installation. For example, to earn the 2020 tax deductible, you would need to establish that you started installation on your solar energy system before the end of 2020. Safe Harbor is ,at it’s core, meant to help people understand exactly how much work you need to put into installation for it to count for the deductible according to the IRS. In order to establish Safe Harbor on your solar energy project, there are two main methods that will be recognized as valid for the solar federal tax credit 2020. The first method, is to establish to the satisfaction of the IRS that you have put in a significant amount of physical work into the installation of your solar energy system before the end of the year. There is no set amount of work or clear percentage that needs to be cleared for this method. The understanding is that the amount of physical work put in simply needs to be enough that it counts to the IRS as being significant in nature. If you are looking to utilize this option, iSolar Brokers can help you engineer your solar system from the ground up. Whether you need to consult with experts, or simply need to find first-in-class solar distributers to help you install your solar energy system, iSolar Brokers can be of service. If you are looking for a less physical route, or one defined more clearly by numbers, the second option will likely be the one for you. The second route to establishing Safe Harbor, is to be able to prove that you have spent at least 5% of what the final installation cost will be before the end of the year. iSolar Brokers can help you achieve this option as well. You can easily spend your 5% on quality materials with iSolar Brokers. We can help you find the perfect inverters, racking solutions, lean monitoring systems and more. Before you know it, you will have hit your 5% cost quota.