Solar company incentives to lure customers not exactly free
"...free gifts or incentives provided to them by a solar company will be subtracted from the total cost of the qualified solar energy system,” said Hawaii Deputy Tax Director Joshua Wisch
The warning about "free gifts" has been on the form for Hawaii's renewable energy income tax credit since 2009. However, incentives from solar energy contractors haven't been an issue until recently as competition in the booming industry heats up.
According to the Department of Business, Economic Development and Tourism, the total value of residential photovoltaic permits has reached $189.9 million so far this year, a 3.9 percent decrease from the same time period in 2012.
With the money pot shrinking, some solar companies have begun offering complimentary iPads or free trips to Las Vegas to entice new customers.
"We're seeing them because the market is really competitive right now," said Leslie Cole-Brooks, executive director of the Hawaii Solar Energy Association. "People really want to install solar, their electric rates are high (and) they want to protect the environment."
But taking that trip for two to Sin City or getting your hands on a new tablet will cost you in the end. The Tax Department says the cost of freebies must be deducted from the overall cost of a solar hot water heater or PV system.
"For taxpayers applying for the renewable energy technologies income tax credit, it is important for them to understand that the value of any free gifts or incentives provided to them by a solar company will be subtracted from the total cost of the qualified solar energy system," Hawaii Deputy Tax Director Joshua Wisch said in a statement to KITV4.
Wisch provided the following scenario as an example:
If a taxpayer installs a system that costs $20,000, but as an incentive for installation the taxpayer receives a trip to Las Vegas that is valued at $5,000, then the actual cost of the solar energy system, for purposes of the credit, will be $15,000.
Jeff Davis, known as The Solar Guy on his daily KGU radio show Hawaii's Tomorrow, is concerned some taxpayers may be caught off-guard when preparing their income tax forms at the end of the year.
"Free iPads, free trips to Vegas, free 15,000 miles, or perhaps even an air conditioner - all that must be removed from your invoice before determining your tax credits, and if you do not, your accountant should catch it," said Davis. "If your accountant doesn't catch it, both the client and the accountant are going to be involved in tax fraud with the IRS and the state of Hawaii tax office."
Currently, Hawaii offers a 35 percent tax credit on solar energy systems up to $5,000. The federal government provides a separate 30 percent credit for each qualifying system, with no maximum amount.
Cole-Brooks says homeowners who are contemplating a switch to solar energy should not shy away from contractors offering free trips or other special incentives. However, she stresses customers should be aware of the tax implications and do their homework.
For instance, Hawaii Energy's $1,000 rebate for the installation of a hot water will count against the overall price of the system when calculating the tax credit.
"Just think about it like anything," said Cole-Brooks. "Be a well-informed consumer with your feet on the ground."
CORRECTION: An earlier version of this story stated the rebate program for solar hot water heaters was administered by Hawaiian Electric. Hawaii Energy has been managing the program since 2009.
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