The passing of the Inflation Reduction Act (IRA) means a few things have changed when it comes to solar financing. Below you’ll find some common questions we receive about the federal solar tax credit under IRA and more.
A tax credit is claimed against a tax liability and is applied as a “credit” to an individual or businesses overall tax bill. It is important to understand to receive a tax credit you must have a tax liability. Consult your tax advisor to determine eligibility.
The personal federal income tax credit (ITC) for the installation of solar energy property is extended and raised to 30% (via the Inflation Reduction Act), with a step-down beginning in 2033, when it drops to 26%.
In some areas, there are state and local incentives as well. Consult your tax advisor, solar installer and/or utility on any incentives for which you may be eligible.
Individuals can claim the federal ITC over multiple years up to the total eligible amount (30% of solar project cost). Consult your tax advisor to better understand your specific situation.
Battery storage systems installed with a solar system have been and continue to be eligible for the federal income tax credit. Under the new legislation (IRA), stand-alone energy storage becomes eligible for the federal ITC, if batteries have at least 3 kWh of capacity. This stand-alone battery credit only applies to expenditures made after December 31, 2022.
No. Solar systems are generally sized to produce most of your home’s energy needs, but typically homeowners continue to have an electric bill that includes a connection fee or other nominal service charges. Each utility is different in how they compensate consumers for energy production; check with your local utility and solar installer for accurate estimates.
Greenpenny secures the loans against the solar system (panels and other equipment included in the system) using a UCC1 filing. For loans greater than $100,000, an additional UCC2 filing is added; this ensures the loan is satisfied prior to the sale of the property in which the solar system is installed.
The maximum greenpenny loan term for battery storage systems is ten years; this aligns to most battery storage system warranties. If you are financing a solar system and battery storage, greenpenny will finance the project in multiple loans if the borrower desires a longer term than ten years for their solar system loan.
Pre-approvals are good for 120 days following the date of application. If a borrower does not close on their loan within 120 days, a new application is not needed, but another credit check will be done to confirm the pre-approval status has not changed.
No, borrowers are subject to the interest rate at the time of loan closing. Borrowers are encouraged to work with their lender and utilize greenpenny’s residential solar loan payment calculators to estimate payments based on current rates.
Following the initial application and pre-approval step, borrowers will be asked to submit documents to verify the information in their application. Those documents include:
Driver’s License, Passport, Government or Military ID
Income Verification (one month of most recent paystubs, if you are self-employed submit your most recent tax return)
Homeowner’s Insurance Policy – this document must include your policy declaration to confirm the new system will be insured
Preferred approach to funds disbursement, with wire instructions (if applicable)
Preferred payment method, including bank account information and voided check image
Preferred monthly payment due date
A hard credit check, sometimes referred to as “hard pull” or “hard inquiry” is triggered when you apply for credit. It occurs when you apply for a new line of credit (i.e. a credit card or a loan) and it means that the creditor has requested to look at your credit history to determine how much risk you pose as a borrower.
Yes. However, with the most-used FICO model, all inquiries made within a 45-day period are considered as one when you are “rate shopping” for things like a mortgage, student loan or other consumer credit (i.e. solar loans). As long as you keep your hard inquiries within that tight window, the impact to your credit score will be minimal.
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