Installation of a photovoltaic installation is a solution that is being chosen by more and more individuals and companies. Thanks to numerous subsidies and noble ideas, new investments related to photovoltaics appear every day. We are also seeing the emergence of photovoltaic farms that produce green energy for sale. Such popularity of photovoltaics and other renewable energy sources is a serious and necessary step into the future, in which we care about the planet and its resources.
To further encourage the establishment of photovoltaics, various types of tax relief are available, which enable, among others, photovoltaic tax deduction. How much is tax deductible for solar panels? How to deduct photovoltaics from income tax?
Tax relief - photovoltaics as a way to low bills and a high tax refund
Photovoltaic panels are a proven way to keep energy bills low while taking care of the climate. Ecological solutions are becoming more and more profitable. Just a few years ago, ecology was associated with expensive services and products, but now we are seeing a reversal of this trend. Thanks to this, more and more people are choosing ecological activities, in which photovoltaics are at the forefront. At the same time, the European Union and the governments of the Member States are introducing further financial facilities to encourage citizens to change. Many people who decide to install photovoltaic panels are therefore wondering whether it is possible to deduct photovoltaics from income tax in the annual settlement.
The answer is: yes, the photovoltaic tax deduction is available to taxpayers who have decided to invest in photovoltaic panels.
Photovoltaics - thermomodernization relief
A significant element of how to deduct photovoltaic panels from tax in a tax return is the thermomodernization relief. What exactly does this term mean? Along with the actions taken to introduce the EU climate package in Poland, it became necessary to replace inefficient and non-ecological energy sources. To make the process easier and faster a thermo-modernization relief was created, which enables the return of income tax for expenses incurred as part of the modernization of real estate. The thermomodernisation relief includes, above all:
- replacement and sealing of windows and doors,
- photovoltaic installation,
- insulation of the building (thermal modernization of the facade),
- replacement of the heat source (assembly of the heat pump),
- connection to the gas or heat network.
Photovoltaics: tax refund guaranteed by ministerial regulation
The thermo-modernization relief was established in 2019 and at the moment it is used by more and more taxpayers every year. The main task of the thermomodernization relief is to reduce the amount of carbon dioxide emitted into the atmosphere and to reduce other harmful gases that affect, among others, climate warming. As follows from the above - the purchase and installation of a photovoltaic installation is considered to be the implementation of a thermomodernization project, therefore the thermo-modernization relief applies here. All details and a list of specific activities and modernization works are provided in the Regulation of the Minister of Investment and Development of December 29, 2018 on determining the list of types of building materials, equipment and services related to the implementation of thermal modernization projects.
Tax deduction of photovoltaics - for whom?
What opportunities does the thermomodernization relief offer? Photovoltaics, which is within the scope of activities covered by the provisions of the thermomodernization relief, is a project that you can deduct from tax. Who exactly can take advantage of this relief?
- Natural persons settling according to the tax scale,
- Natural persons settling according to a flat flat tax rate,
- Natural persons settling according to a lump sum on registered income.
However, it is worth mentioning that the deduction from income of all expenses incurred for the implementation of a thermomodernization project under the thermomodernization relief is due only to owners and co-owners of a single-family house. At this point, it should be noted that the term single-family residential house also includes semi-detached or terraced houses.
What's more, deduction of photovoltaics from the tax (linear, tax scale or lump sum) is also available to small entrepreneurswho have allocated no more than 30% of the house area for commercial premises, and the rest for the separation of one residential premises.
Tax deduction of photovoltaics - how much percent?
The question often arises "how much percent can be deducted from the tax for photovoltaics?". In this case, however, we are talking about a top-down maximum limit, which at the moment is 53,000. This limit applies to all costs incurred by the investor, such as:
- cost of purchasing a photovoltaic installation,
- installation of a photovoltaic installation,
- building materials used to erect a photovoltaic installation.
However, the maximum amount of photovoltaic tax deduction may not exceed the annual income of the taxpayer. However, if such a situation occurs, he may partially deduct the expenses incurred on solar panels for the next 6 years, up to the maximum deductible amount if it coincides with the actual investment costs.
As part of the thermomodernisation relief, the value of the tax base for the costs related to equipping the house with photovoltaics can be deducted from the recorded income. These expenses - as part of the tax relief - reduce the tax base, which is associated with the payment of lower income tax.
Photovoltaics: tax deduction - what do you need to remember?
If you already know whether solar PV is tax deductible, you also need to remember a few basic issues. Above all:
- You can settle the surplus of costs incurred as part of investing in photovoltaics for 6 consecutive years, but they are counted from the end of the tax year in which the first expense was incurred.
- A tax deduction can only be made for completed investments or investments that are in progress. In the second case, however, it must be remembered that the construction must be completed within 3 years from the first expenditure.
- The thermo-modernization relief may also be used by real estate under joint ownership, i.e. spouses. In this case, the limit in which photovoltaics can be deducted from tax is double - for each spouse, PLN 53,000, which gives a total of PLN 106,000 for deduction of photovoltaics.
- In the case of active VAT taxpayers, the amounts taken into account are given in net values, while ordinary taxpayers indicate gross amounts in the settlement.
Tax refund for photovoltaics - how to submit a settlement?
So how do you deduct photovoltaics from your tax? The deduction of costs covering the photovoltaic installation and its installation can be made in the annual tax settlement. The amount of the tax deduction may be calculated from income in the case of a flat tax and tax scale, or from income if the taxpayer settles with a lump sum on registered income.
Thermomodernization projects are shown on the PIT-0 form, which should be attached to the appropriate PIT due to the selected form of taxation. In this case, we are talking about PIT-36, PIT-37, PIT36-L or PIT-28. The form should show the amounts allocated to the photovoltaic installation. The settlement is made for the year in which the first expense related to the photovoltaic investment was incurred.
Photovoltaics: tax credit with Open Profit
At Open Profit, we deal with comprehensive accounting services, including helping to reduce the amount of income tax using the thermomodernization relief in single-family residential buildings. We also settle photovoltaic installations for small entrepreneurs, including sole proprietorships. Depending on the method of settlement, we advise on the best tax exits that will allow you to reimburse the expenses incurred for the energy modernization of houses and commercial spaces. Relief for photovoltaics with Open Profit is an effective settlement.
Photovoltaic farms - can they take advantage of the thermomodernization relief?
Photovoltaic farms, in accordance with the definition of the thermomodernisation relief, are not covered by this programme. It includes only single-family residential buildings. At the same time, it is worth noting that despite the use of renewable energy sources, setting up a farm is associated with economic activity. Therefore, it is necessary to pay income tax in the previously selected form of taxation.
In addition, it is also necessary to pay a tax to the commune - agricultural or real estate. In this case, however, legal disputes are ongoing, because it is difficult to clearly classify large-scale photovoltaic installations as real estate, and at the same time their presence on the land prevents the use of land for additional agricultural activities, such as grazing animals. Currently, the tax is settled, which is determined by the area of land used for photovoltaic panels.
- What is the thermomodernisation relief?
The thermomodernization relief is a tax relief introduced in 2019. Its aim is to encourage owners of single-family residential buildings to modernize their power sources and heat sources. In this way, the European Union wants to reduce CO2 production and popularize renewable energy sources.
- Can solar panels be tax deductible?
Yes, thanks to the thermomodernization relief, you can deduct expenses incurred for thermomodernization activities, including the installation of photovoltaic panels. Thanks to this, you can reduce the tax base during the annual tax settlement.
- How to submit a settlement with photovoltaic tax deduction?
The settlement for photovoltaics is submitted on the PIT-0 form, which must be attached to the appropriate PIT selected due to the form of taxation. This document must include a list of expenses incurred for the implementation of thermal modernization projects.