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PDtax
PDtax, CPA firm owner
Category: Tax
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Experience:  32 years tax experience, including four years at a Big 4 firm.
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I want to install solar panels using a tax shelter investment

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I want to install solar panels using a tax shelter investment that is not making very much money on $60,000. I am guessing probably $25,000. Is it cheaper to use this investment cash or would I be better off getting a loan. I am assuming that there will be a tax deduction for installing solar panels and I can use the loan against the house as a tax deduction as well. I am currently paying on Sallie Mae education loan for my son, approximately 35,000 and another $20,000 car loan and do not want any more debt.
Submitted: 9 months ago.
Category: Tax
Expert:  PDtax replied 9 months ago.

PDtax :

Welcome to the site. I'm PDtax, and will be helping you today.

PDtax, CPA firm owner
Category: Tax
Satisfied Customers: 1881
Experience: 32 years tax experience, including four years at a Big 4 firm.
PDtax and other Tax Specialists are ready to help you
Expert:  PDtax replied 9 months ago.
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Customer: replied 9 months ago.

I don't see a question


 

Expert:  PDtax replied 9 months ago.
Hi Alice,

Can you confirm that your tax shelter investment is only worth $25,000 to sell? And that's the cost of the solar panels you want to install?

I would normally ask about your income and tax situation, but the debt service you mention leads me to focus just on debt.
As such, if you can commit to being in your home for a few years, the solar might be a good way to go.

I see you have just responded. I will post this and give you a chance to respond.
Customer: replied 9 months ago.

I have $60k sitting in a bank basically making nothing. I wanted to know if the tax penalties would be cancelled out by any tax benefit from installing solar panels. Also save $125 to $175 a month in electric bills, I still have 10 years of work left in me and can put more aside with these savings.

Expert:  PDtax replied 9 months ago.
I misunderstood. You meant a tax advantaged account, like an IRA or 401(k). I thought you meant a tax shelter investment, which I think of as oil and gas partnerships and the like.

I don't normally recommend you take retirement money and liquidate for this kind of thing. Since your bank account retirement account is not yielding much, I can see why other options, like solar, might make sense.

The penalty (10%) and tax cost are close to the Federal tax credit, so it's not a bad idea. Virginia has solar incentives too. Add in the cut in your utility bills, and increase in the value of your home, and this idea is pretty good. Non-traditional, but pretty good.

Thanks for asking at Just Answer. I'm PDtax.

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