Solar for Businesses: What Do I Need to Know About Depreciating Solar Energy?

If you own a business in Northern Virginia, DC, or Maryland, solar energy is an incredibly lucrative investment. In addition to giving you a federal and possible state tax credit, solar energy allows you to depreciate the solar panels as an asset on an accelerated schedule.

What exactly does this mean for your business? The short answer is a healthy long-term investment and significant savings each year. At Prospect Solar, we are dedicated to helping all of our clients understand the economics of solar energy and all the benefits they can earn. Here is our quick guide to solar depreciation:

 

What is Solar Depreciation and How Does It Work?

Depreciation is defined as the loss of value of solar panels over time, which business owners can deduct from their income tax each year. This can earn your business impressive savings and help you earn a better bottom line.

The most popular method of depreciation is through MACRS, The Modified Accelerated Cost Recovery System. This method was created in 1986 to allow businesses to depreciate their property and earn better savings. MACRS allows business owners to recover the cost of the business’s solar panels over a specified period of time. This period is usually 5 years, but this may vary.

There are a few qualifications businesses must meet in order to depreciate solar panels. Your business must prove that your solar panels are being used for business purposes. In addition, if your business is eligible for the 30% Investment Tax Credit, you must reduce the solar panels’ appreciable basis by one-half of what the tax credit is worth. This will allow you to deduct up to 85% of the solar panels.

Solar is already an affordable investment, and depreciation paired with solar’s other economic incentives make it all the more appealing.

 

How Can Solar Depreciation Benefit My Business?

The biggest benefit of depreciated solar panels is that your business will owe less in income tax each year. Depending on the original cost of your solar panel installation, this can mean big savings each year, which any business (large or small) can appreciate. These savings will open you up for a variety of other economic opportunities. Having extra amount of money in your business’s account is always great for financial security. You can also spend your money on something your company needs instead of your income tax. Further, these tax-season savings are in addition to your lower monthly energy and operating costs, which all adds up to impressive annual savings.

 

Commercial Solar Panel Installation in Northern VA, DC, and Maryland

If you are considering switching to solar energy for your business, you are choosing an investment that not only helps your business save money, but helps you foster a healthier eco-friendly public image and help contribute to a greener planet. Prospect Solar offer commercial solar panel installation in Northern VA and beyond. Not only do we install solar panels, but we help you determine the best financing option for you as well as help you understand what economic incentives you are eligible for.

Is your business ready to make the switch to solar? Begin your solar journey today.