MACRS AKA Accelerated Depreciation for Commercial Solar
May 21st 2016
People are always asking, “What is the return on investment for solar?” The calculations for the ROI on solar projects is pretty complicated and has to take in account all sorts of things like; the cost of the total system to be installed, the energy output for your solar installation, shading, the rates you are paying from your utility, interest rates on financing, and of course tax benefits.
The tax benefits for solar installations are still around from the federal government. In late 2015, Congress decided to extend the tax credit through 2022. The current rate is still at 30% for residential and commercial property. In years to come, the tax credit percentages will start to decline, and then be phased out after 2022. Solar has already reached grid parity in many markets, and it is believed that by 2022, solar will reach grid parity for all markets and a tax credit will no longer be necessary.
Let’s hope it does!!
Businesses have an added tax incentive called Modified Accelerated Cost Recovery System (MACRS) also known as Accelerated Depreciation. MACRS can be applied to lots of different equipment used in businesses: like vehicles, printers, medical devices, and of course solar modules are applicable for this as well. Those companies with the tax appetite can depreciate the value of the installed solar equipment, such that you could essentially write off the entire cost of the system in as little as 3 years… 3 years you say! YES, 3 years! Since this is the topic of this blog, lets dive into the details. Read more