Commercial Solar Arrays and MACRS Depreciation

MACRS DEPRECIATION OF SOLAR PANELS

Normally, the depreciable life of solar panels is 85% of the full solar system cost which may be depreciated roughly as follows:  Year 1 – 20%, Year 2 – 32%, Year 3 – 19.2%, Year 4 – 11.5%, Year 5 – 11.5%, and Year 6 – 5.8%.  Are you interested in a free solar consultation to show you what the numbers could look like? Click HERE!

For those new to business ownership:

As a large purchase that will be used overtime, a solar system’s cost is deducted from taxable income via a so-called 5 year ‘depreciation’ (rather than 100% immediately as a direct ‘expense’).  While 26% of the cost is recovered directly as a credit against tax liability for the year of installation (see above), the law nonetheless allows 85% of the full system cost (rather than 70%) to be deducted from taxable income over time via ‘depreciation.  Depending on the tax bracket, roughly 12-25% of original system price may be recouped this way.

 

For more information on the federal MACRS & Bonus, see IRS Publication 946, and IRS Form 4562.   IRS Brief Overview of Depreciation

Always contact a trusted tax professional to verify eligibility in business’s specific case.

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