Federal Tax Credit On Home Solar Panels To Expire In 2016

NEW JERSEY (CBSNewYork) -- Homeowners are rushing to take advantage of the opportunity to save money and switch to a renewable energy source as a federal tax credit that helps offset the cost of solar panels is set to expire at the end of 2016.

If money is your main motivation, experts say now is the time to consider purchasing a solar array for your home -- while you can still take advantage of the federal investment tax credit, CBS2's Elise Finch reported.

"What this is -- it's currently available -- is a dollar-for-dollar reduction on your tax bill, equal to 30 percent of the cost of your solar installation," Ted Repetti, of PSE&G, said. "If you don't have a solar system that's built and operating by the end of 2016 for a residential homeowner, that tax credit goes to zero."

Repetti loans money to PSE&G customers who want to make the switch to solar. The loans help customers handle up-front costs, which can be as high as $40,000.

Ryan Franzo, a representative from Solar City, said a typical home installation takes them a day or less. But the required permits and inspections take months.

"Permitting takes about the longest," Franzo said. "From sale to getting your home powered up is roughly one to three months."

Time is of the essence when it comes to getting approvals, and candidates with good credit, a large tax bill or who are willing to pay cash upfront are all favorable.

Your home must also have a fairly new roof and offer south-facing roof space that isn't blocked by trees in order to truly benefit from the panels.

Most people lease solar panels, and while they don't get the tax benefit, the company passes the cost savings onto them.

Leasing is a better option if you don't have the upfront cash, have bad credit or a low income.

But if you're looking to put your home on the market, beware -- some buyers think solar panels hinder a houses appeal and potential owners have to meet the same lease conditions you did to enjoy the credit.