And there’s a crazier one Lane, you and I have never spoken of, which is the solar credits that are still floating around out there for business use. For example, what’s going to become a big incentive and I can almost tell you that this is going to be a reality. So I’m going to get my crystal ball out and say, you’re going to watch this.
And then we’re going to listen to this in three or four years and say, we were predicting right now if I put a solar array on it and let’s say it costs me a million dollars, I get a tax credit. Of $260,000, 26%. Even if I finance the whole thing, I get a credit. That’s not a deduction, that’s a dollar for dollar credit.
So if I owe a hundred thousand dollars in taxes and I have a $270,000 tax credit, I don’t pay any tax that year. I use a hundred thousand of it and I carry it forward into future years, but I also get to depreciate. The solar United depreciate, 87% of it. So a million bucks, I’m going to get an $870,000 deduction in year one, plus a $260,000 tax credit.
And I think they’re going to increase those incentives. It used to be 30% and then this year went down next year. It goes to 22%. So that solar panel, you can deduct it all in the first year. You can deduct 87% of it. And you get a tax credit for 26%. Maybe I should go around Hawaii and find a contractor.
It makes deals with some people, but some solar panels have just sell off the credits to investors a year. You’re already there. Yep. That’s exactly what they’re doing. So I have a client. That’s what he does. He installed solar, but it gets interesting. What he does. He goes to a utilities, public exempt organizations, 501(c)3 churches.
And he’ll go find a wealthy parishioner and say, Hey, would you put the solar array on and then do a five-year contract on the energy because there’s going to be energy independent. And so they’ll sell it to the charity and say, Hey, after five years, the array is yours. And so he’s taken the big tax credit to have a little tiny bit of income on the.
Revenue that’s coming in because they’re selling them the electricity or they’ll usually they just give a right to the charity. So that washes itself. There’s a deduction. And so you have a little bit of income with a deduction that equals that, but you get that first year. It’s a ridiculous deduction, but where that’s really going to be important later is next year, if the taxes do increase, guess who’s going to be really incentivized to do stuff.
That’d be cool. Like investors bring into capital, they get the tax incentives and the plan owner gets. Cheaper energy. Yeah. What they do is they lock it in and they’ll say your energy, won’t go up for five years and then you have the right to buy it at some peppercorn price. So you’ve already depreciated it.
So you don’t really care. You would recognize all the income as ordinary income. If you sold it. For more, more than your basis. So you have a really tiny basis. So that’s what you sell it to them for you like, Hey, 13% basis or whatever that is. So I just want to not pay anything. Yeah. So during those five years, I have a little bit of energy money coming in and I have a payment on the loan, on the solar that it’s basically washing itself.
So I, again, I’m getting a huge tax credit. I give a huge deduction. I have very little income that’s coming in off of it. So I’m getting a big first year benefit. And yes, there’s a lot of people starting to do those now. And I think that creative syndicators are going to get into that area.