Anyone with experience with microFIT solar

Does anyone have any experience with the microFIT solar program?

We're moving, and the new house has a small solar installation on the garage roof. The income is approx. $100/month.

Does anyone have any experience in changing over the FIT contract in a way to minimize what I have to give back to the gov't as income tax on earned income?

A friend suggested incorporating, but I can't see the benefit for the size/$. I know the local utility has a business listed on file for the solar installation currently.

I believe the installation is 3yr old, not sure how you would calc/est the CCA deduction you can claim (ie. not sure how the current owners have handled the deduction).

Any tips/suggestions would be appreciated.

My understanding of the microFit program is 50 % of it is subsidized by tax payers. So in fact we are paying you . Does something seem wrong with that ?

If you incorporate investigate all the costs of hiring a CA to do your books, registering the company and paying for article of incorporation. A decent CA will set you back a minimum 2K per year (even tho you will have little paperwork to process). As a sole proprietor in my business it has far more tax advantages if you are making less than 250K per year. After 250K it is better to incorporate. As for Micro fit, unless you are in a lease/contract and depending on the size system, I would look at just taking yourself off the grid if possible or feasable.

Talk to current owners and ask them to show you their books. Can’t hurt to ask, also if this is a registered business there might be some legal implications for closing. DO your homework, and make sure you are not getting into something that has a current contract that will be binding on you after sale…

also pretty sure all contracts where for 20 years. so check into that......by all means ask the owners what they are doing..........

as someone else said we the taxpayer are paying for it , BIG TIME. You also might find that you can disconnect it and remove it.

i would recommend checking out the Save on Energy site and they might have some answers for you as well.

or even a Governement site ....

LAst one

How old is the system, remember a 25yr lifespan is normal @ 80% power guaranteed (most quality systems). Is this a roof mount or ground mount system? If roof mounted, extra care on roof inspection to ensure roof is “cooked off”. Early panel system are known to degrade roof shingles faster due to separations between panels and roof surface. When was the roof changed last? If roof mounted, cost of removing panels and replacement should be considered. As for CCA, your buying a new business and it will be incorporated in your mortgage. You’re CCA is based on a class of depreciable property see link http://www.cra-arc.gc.ca/tx/bsnss/tp...prcbl-eng.html

Defining your Class will determine your rate of return on investment, and you will be able to see in real numbers. Remember when property is part of the investment the ROI is usually of 20yrs. My trucks and equipment are Class 10.1 and get a 30% ROI in the first year of ownership (100K truck equals 30K in “write off”) It a good tool to reduce income in high profit years, I.E. 100K truck cost 1000 per month or 12K per yr, but in the first year I get 30K in tax deduction, netting 18K in saved taxes. Make sure you know Class of asset and ROI, to see if feasible or makes business sense.

Thanks

Contract is for 20 years, the installation is only 2 years old (2013).

It's a roof mounted system & it looks like the roof/shingles were done at the same time (2013).

I may try and make contact with the owners directly as suggested. My current method of routing questions through the real estate agents is slow and frustrating :)

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Originally Posted by RTRonthefly

Does anyone have any experience with the microFIT solar program?

We're moving, and the new house has a small solar installation on the garage roof. The income is approx. $100/month.

Does anyone have any experience in changing over the FIT contract in a way to minimize what I have to give back to the gov't as income tax on earned income?

A friend suggested incorporating, but I can't see the benefit for the size/$. I know the local utility has a business listed on file for the solar installation currently.

I believe the installation is 3yr old, not sure how you would calc/est the CCA deduction you can claim (ie. not sure how the current owners have handled the deduction).

Any tips/suggestions would be appreciated.

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a) You cannot write off employee income against home expenses, except under very special circumstances approved by your employer.

b) You do not want a home based company owning your home. Never. Ever. Ever. To deduct CCA, it would have to own your home.

c) If you did, you would calculate the % of your homes floor space 100% DEDICATED to your business. Take that % of the cost and calculate CCA at 5% per year.

i.e. 10k system, 10% of house floor space dedictated to your business

10k * 0.10 * 0.05 = $50 per year. Even with a marginal tax rate of 50%, you'd be saving $25 per year. How much trouble would you go to for $25?

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Originally Posted by werner.reiche

a) You cannot write off employee income against home expenses, except under very special circumstances approved by your employer.

b) You do not want a home based company owning your home. Never. Ever. Ever. To deduct CCA, it would have to own your home.

c) If you did, you would calculate the % of your homes floor space 100% DEDICATED to your business. Take that % of the cost and calculate CCA at 5% per year.

i.e. 10k system, 10% of house floor space dedictated to your business

10k * 0.10 * 0.05 = $50 per year. Even with a marginal tax rate of 50%, you'd be saving $25 per year. How much trouble would you go to for $25?

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Sorry - perhaps some confusion.

The only thing that would be owned by (potentially) a company (SP, LP, or Corp) would be the solar installation, NOT the house.

Under the IESO web site - it is possible to assign the contract over to a business name. I assume that is what the current owners have done, as their account with the local utility for the solar installation is a Business account.

I am trying to contact the current owners as we speak to clarify how they set up the contract with the IESO and the local utility.

Okay - but the business can only write that off against its income - its not a refundable tax credit.
Is the business going to have any other income - other than what you are going to pay it for your electricity?
If not, you are going to pay this business the amount of the CC with your AFTER TAX dollars.
...and the amount you claim as the initial capital cost will be what the business pays you for it - you can't just "give" it to the business and then claim CCA on it (well, not legally). And the amount you receive from your business for this is "personal taxable income".

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Originally Posted by werner.reiche

Okay - but the business can only write that off against its income - its not a refundable tax credit.
Is the business going to have any other income - other than what you are going to pay it for your electricity?
If not, you are going to pay this business the amount of the CC with your AFTER TAX dollars.
...and the amount you claim as the initial capital cost will be what the business pays you for it - you can't just "give" it to the business and then claim CCA on it (well, not legally). And the amount you receive from your business for this is "personal taxable income".

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Yes, not looking to do anything illegal. Just trying to understand how the current owner has the system set up with a business account in eyes of the local utility & how to get that transferred over to us.

I would think if you spent a 1/2 hour at the computer and checked online there is probably a forum for solar panel users and maybe find your answer there, or even the government website, this must be getting to be a bit of common occurrence with people selling their homes with the solar panels on them.

I have a friend who had a deal to buy a house that had a solar setup, due to the nature of it they were calling the property commercial and he was not able to get a mortgage, maybe ask that question too, will that potentially change the zoning.

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Originally Posted by Fox

I have a friend who had a deal to buy a house that had a solar setup, due to the nature of it they were calling the property commercial and he was not able to get a mortgage, maybe ask that question too, will that potentially change the zoning.

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From a property tax perspective you do not want to get rezoned from residential to commercial. Commercial in must areas is 2-3x what residential is.

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Originally Posted by werner.reiche

From a property tax perspective you do not want to get rezoned from residential to commercial. Commercial in must areas is 2-3x what residential is.

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Mortgage turns to business and insurance ends up as business as well, it can cost you a lot more money.

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Originally Posted by BIG MAC

I would think if you spent a 1/2 hour at the computer and checked online there is probably a forum for solar panel users and maybe find your answer there, or even the government website, this must be getting to be a bit of common occurrence with people selling their homes with the solar panels on them.

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Yup, the IESO has a microFIT page with a pdf on how the assignment process works. I am working through that now.