This article is part of our series, Solar Scams Exposed: Lies, Loopholes, and High-Pressure Sales Tactics You Need to Know, where we break down the biggest solar sales scams and how to avoid them. Click here to read the full guide.
TL;DR
Many national solar sales reps tell homeowners that they can claim the 30% federal tax credit (ITC) on a new roof if it’s bundled with a solar energy installation. Buyers Beware! The tax credit only applies to solar-related expenses, not home improvements like roof replacements.
New Roof With Solar Panels?
Imagine this: You’re sitting at your kitchen table, sipping your morning coffee, when a friendly solar sales rep knocks on your door. They promise that not only can you harness the sun’s energy, but you can also claim a 30% federal tax credit on a brand-new roof if it’s bundled with a solar installation.
Homeowners can claim a 30% federal tax credit under the Residential Clean Energy Credit. Data from 2023 shows over 1.2 million taxpayers took advantage of this credit, claiming around $6.3 billion in total, or over $5,000 per person.
Does A New Roof Qualify For Solar Tax Credits?
The allure of upgrading your home with solar panels is undeniable, especially with the promise of federal incentives.
According to the IRS, this credit allows homeowners to deduct 30% of the cost of installing solar energy systems from their federal taxes.
Solar-related expenses, including solar panels, inverters, mountain hardware, electrical upgrades, solar water heaters and battery storage technology—like the Tesla Powerwall (if it’s charged primarily with solar energy)—are covered by the clean energy credits. Even labor costs for onsite preparation, assembly or solar installation may qualify for the tax credit as well.
But here’s the catch: traditional roofing materials and structural components don’t qualify. So, if your roof needs repairs or replacement before installing solar panels, those costs are not eligible for the tax credit. The only exception is for solar roofing tiles or shingles that generate electricity.
For example, if you install a solar system that costs $20,000, you could receive a tax credit of $6,000, lowering your overall costs.
While we are not tax experts, we can assure you that adding the cost of replacing your roof into the federal income tax credit equation is one way to dirty up your taxes, rather than gaining a clean credit. If a solar contractor tells you that the ITC will pay for your roof, that’s a red flag.
What to look out for: One example of a quote you may see includes a full re-roof cost into the financed amount and federal tax calculation, like these:
- Option 1: Standalone Solar
- Financed Amount: $56,133.22 (includes full re-roof)
- Federal Tax Credit Listed: $16,839.97
- Option 2: Bill Optimization Program
- Financed Amount: $73,374.60 (includes full re-roof)
- Federal Tax Credit Listed: $22,012.38
How To Avoid Solar Scams
Navigating the solar market can feel like walking through a minefield. Here are some practical tips to ensure you don’t get burned:
- Get Multiple Quotes: Always obtain estimates from at least two or three solar installation companies. This will give you a better idea of what the installation costs should be and whether the contractor is being upfront about the tax credit.
- Be Skeptical of “Free Roof” Offers: If a company offers a “free roof” along with the solar installation, ask for detailed information about costs and if roof replacement is necessary for the solar system.
- Consult a Tax Professional: Before making any decisions, it’s always a good idea to speak with a tax professional to understand how the tax credit works and how it applies to your finances.
- Read the Fine Print: Review the contract carefully before signing anything. If the installer promises to cover roof replacement costs through the tax credit, ask them to put it in writing. If they refuse or seem hesitant, that should concern you.
While the prospect of solar energy is bright, it’s essential to approach installations with a well-informed mindset. Remember, if something sounds too good to be true, it probably is. Always verify claims, consult with professionals, and do your research to ensure you’re making the best decision for your home and finances.