Depreciation/MACRs

[albert436]

One of the solar companies mentioned to me that a business owner may put solar on property that they do not own, and then eg. lease it to the property owner, and then be able to take depreciation on the solar project.

I don't quite understand it, has anyone heard of a business other than a big solar company such as SunPower doing this type of thing?

Thanks!

thesaurus.jpg

[Naptown]

Quite a few actually
Solar City
Sungevity
Sunrun
Solar universe
Trinity
Astrum
Just to name a few.

[albert436]

Thanks Rich, I think they were talking about an everyday garden variety small business owner such as we might have here on this forum, for example.

But yes applying the same model, on a "micro" scale.

Doable?

[Sunking]

It is simple, they use your money to take profits and depreciation. Works just like leasing a car. You buy it and pay for it on a loan they make interest from, then they sell it after the lease has expired and made money again.

[Naptown]

Thanks Rich, I think they were talking about an everyday garden variety small business owner such as we might have here on this forum, for example.

But yes applying the same model, on a "micro" scale.

Doable?

Yes a business owner can place a system on a leased property which he has permission to use the roof and depreciate it.
setting up a leasing company is a bit more difficult.

[Volusiano]

As a business, I hear they're allowed to take accelerated depreciation on a solar system while simple homeowners like us can't. This is what enables them to make prepaid leases more attractive than a purchase to a homeowner.

[Ian S]

Works just like leasing a car.

Nothing like leasing a car at all. It's more like leasing business equipment that improves productivity and thus increases the bottom line. In the O.P's case, that bottom line increase is the extra $50 a month he has in his pocket because the combined monthly payment for electricity and solar lease is less than what he had been paying for electric alone. He's also partially protected from future increases in higher tier rates. Yes, the leasing company makes money but that's the beauty of our capitalist system.

[Ian S]

As a business, I hear they're allowed to take accelerated depreciation on a solar system while simple homeowners like us can't. This is what enables them to make prepaid leases more attractive than a purchase to a homeowner.

Yes, that's true. A small business can purchase a solar system and get the accelerated depreciation. But if a small business leases a system, they do not get the accelerated depreciation - only the actual owner gets that. The business owner of course can deduct the lease payments as a business expense.