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MACRS Depreciation
MACRS (Modified Accelerated Cost Recovery System) depreciation is another way the federal government is helping make alternative energy more appealing to business owners. As part of the federal tax code, this system allows for the accelerated depreciation of certain investments. Solar is classified as a 5 year property and 85% of the system cost can be depreciated over 5.5 years, as follows:
Year 1 |
20% |
Year 2 |
32% |
Year 3 |
19.2% |
Year 4 |
11.5% |
Year 5 |
11.5% |
Year 6 |
.058% |
This allows you to recover a large portion of your system cost in a relatively short period of time through depreciation deductions.
