Anyone w/ solar company recs in KCMO, Kansas City? Independence?

Question

Hey I'm an OOS in KCMO and I'm looking to put solar on my rental. I don't want to hear about how I shouldn't do this ha... but instead anyone with any solar company recommendations?!?!

I've gotten one quote but would love to get another.  Has anyone in KCMO or anywhere close by done solar on their house or rental?  There are some great rebates and credits... and I'd love to talk to anyone who's pulled off applying for the federal credit with a rental as I heard there is a way to as a business?  Anyways, thanks so much to anyone with info!

Steve K. · Answer

I would reach out to Good Energy Solutions (SunPower Elite dealer in Lawrence)

Regarding claiming the 30% tax credit on rental property: I've always been told no (including by my own CPA). Sec. 25D clearly states that the solar tax credit is for an individual taxpayer when the panels are installed for use in the taxpayer's primary residence. From tax code 25D: "solar water-heating panels and solar electric (photovoltaic) panels must be installed for use in a dwelling located in the United States and used as a residence by the taxpayer". Thus, Sec. 25D does not allow a credit when solar panels are installed for use in a residential rental property. The IRS further clarified this issue with Notice 2013-70 which provided further guidance on Sec. 25D. In the notice the IRS specifically states that while the credit may be taken for solar panels installed for use in a vacation home (as a percentage based on the time the taxpayer spends at the property I believe), the taxpayer may not claim the Sec. 25D credit for improvements made to an investment property, such as rental property, that is not also used as a residence by the taxpayer.

However for rental/investment property, instead of the solar credit 25D, you may be eligible to take an Investment Credit (IRS Form 3468) https://www.irs.gov/pub/irs-pd...

@Tanya F. also recently brought this piece from the tax advisor to my attention, which discusses how a business may be able to claim a solar tax credit on a rental property as a business through Section 48:

https://www.thetaxadviser.com/...

Talk to a CPA about the tax credit!

Matt K. · Answer

Interesting thoughts, but I'd be Leary of this for one simple reason....if a tenant has "free" utilities they will abuse it. I had a tenant rack up a 600 dollar electric bill in a month basically running multiple AC non stop 24/7. Even if the cost didn't impact you, the usage of appliances would ...more so with your long outlook. This was before they switched it into their names and ended up being a headache for me, but I was at least able to recoup the funds.

In regards to section 8 isn't the voucher limited to a certain amount and past that point it's on tenant to pay the difference? I don't think you'd really get anything other then a headache out of including utilities....but I don't have section 8 tenants.

If you have a good property turnover is low, I've got on property where tenants are wanting a 4 year lease and they've been there 3 years already. They were below market but I've brought them up to market and even slightly above to take account to the 4 year request...should pencil out pretty even.

KC a lot different then here in CA and honestly most people aren't going to care about being green and are totally used to already paying utilities.  They're more concerned with living somewhere that has a sense of community or good schools for kids. Add in some trendy paint and floors with a mix of pro photos...you're good to go.

Adam Sankowski · Answer

@Steve K. Thanks as always for the info!! I'll def. check that company out.  Wow well that Tax Advisor link def. makes the case that in section 48 it says that rental properties qualify.  I'll def. ask my CPA but heck I'd like to give it a try.  Its kinda what makes the numbers even come close to working on a rental, at least from my initial pricing of systems.

Let me know if you hear of anyone else trying this credit for rentals please, I'd love to connect!

Tanya F. · Answer

You could say that electric utilities are included in the rent up to xxx kWh or yyy dollars per month usage, (that amount xxx or yyy you'll determine over time, for us it's $45 for a 2BR) and any amount above that they will owe you.  You can reconcile with them each month or quarterly. That'll give them incentive to conserve a bit. Buy them a box of LED bulbs and you should be good.

Our local utility requires that the bill be in our name when solar is on the roof.

12 year payback isn't bad, either. Figure out the percentage per year. A steady NO-risk investment that yields better than 5% is really pretty good.  Look at what CDs and savings accounts are these days. Plus, you KNOW that the electricity rates are going to increase in the future at some point.

We buy our panels with cash.

Adam Sankowski · Answer

So section 8 from what i understand has two voucher amounts- one with and one without utilities.  Every area manages section 8 differently.  They don't do this in Indy where I also have rentals but in KCMO apparently (this is all coming from my PM) there is a much higher voucher amount for including utilities so that is why I am giving this a try.

And yes I totally hear you that tenants don't necessarily care about this but also, if you're really concerned about the environment, then this is an important population to target because they will be the last ones putting solar on their house... that is why I'm trying to figure out a way to make this work for them regardless. I've had enough of just providing the decent rental (which is awesome and noble in its own right) but I want to see if I can make an eco rental actually pencil out.

Also I don't buy that tenants will use more when they know its free.  I totally agree that there will be the random person that will run AC anyways.  Those people will always be there regardless though.  Sounds like they were crappy/ crazy tenants regardless.  But for a person to think that they have free utilities and then have that directly correlate to lazier behavior?  There is almost too much work for someone ha.. people usually revert to their status quo regardless so I'm hoping for this to be true.  I'll let you know how it turns out but I'm betting most people will just use what utilities they would normally use anyways.

I'm sure that someone somewhere might try to use the electric to grow weed or something but I'm up for supporting the young entrepreneur I guess too, JK!

Adam Sankowski · Answer

@Matt K. So your right, if your tenants pay utilities then it probably doesn't make sense.  Of course during the next turn you could include utilities but that might not make the numbers work either really.  My rental in KC is section 8 and apparently the section 8 people will pay a bunch more if you include utilities in the rent.  And you don't have to wait for a turnover, you just apply for a different voucher I believe  Now, I haven't done this yet- the property manager that I'm going to switch to has though. For me the fact that the rental increase is immediate also a set guaranteed rate which makes everything easier to figure out and more worth it.

Even with this increase the payback on solar is a pretty long term one, like 12 years or so to break even.  BUT... there are two other major advantages for me and I'm assuming others as well:

1) There is a 30% federal tax credit.  As you can read from the thread above there is some debate over this but assuming that your willing to give it a try and be aggressive with your taxes that's a solid chunk of money.  About 7-8K depending on the size of your system.  The key is that solar companies know that no one is coming in with 25k in cash to buy a system with a 12 year break even point.  So they often provide financing and at great terms.  And you can chose to include or not include the tax credit in the price.  So if you pay a bit more for the financing (at like 3.79%, very low) then you can get this 8K immediately as a tax credit... basically they give you 8K at 3.8%.  That's half of a downpayment on another lower priced rental property and at the lowest terms.  They don't mean for a by product installing a solar system it to be an insanely low personal loan on a chunk of money but you can def. do it this way.

2) You can depreciate this system I believe all in the 1st year because I believe it is considered a 5 year item and then you can take bonus depreciation.  This is what a solar company told me so I need to double check this!  That's a 25K write off on section E though.  I make a fair amount from a higher end Airbnb rental... now we are trying to figure how to to qualify it under section E but if we can than I get to finance a system like this at a low interest rate but then take a huge chunk of deprecation where I can write off over half of my Airbnb income for the year using it.  Not a bad deal if you have a lot of income coming in on schedule E.

I don't know if that helps or if any of this would apply to your own situation?  And disclaimer: This is all theoretical, I haven't actually done any of this yet, so I don't 100% know about the deprecation or the 30% rebate but hoping to soon.

And then, even without the tax stuff it is greener... which is a big deal to me... Its been eating me up that I have these rentals with perfect roofs for solar and not doing anything with them considering climate change.  Just decided its time to take action regardless of the cost.  But also it is financed so its a small monthly payment and even though it will take a while its not like I'm losing money on it.  Even if it is a 12 year payback, after that its a pretty sweet deal.  Plus you've locked in electrical costs for the future.  I'd hate to see how electric costs in Cali are going to look after P&E is forced to redo the entire electric grid :)

Matt K. · Answer

Curious how the math works on your numbers... All my tenants pay utilities so I don't see the benefit aside from being more green.

Adam Sankowski · Answer

@Eka Linwood Thanks for the tip! I'll def. check them out!

Eka Linwood · Answer

If you are looking for quotes for Solar PV, I think SolarHood can probably get you a few quotes from the local Kansas City contractors.  They have some "Group Deals" and calculators that can help you forecast savings from solar pv installations.

Adam Sankowski · Answer

@Cliff Harrison Thanks for the tip I'll def. check them out!

Anyone w/ solar company recs in KCMO, Kansas City? Independence?

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