SOLAR TAX LEASE FOR COMMERCIAL & INDUSTRIAL COMPANIES.
A LOW-COST SOLAR ACQUISITION STRATEGY
LFC Capital, Inc., with more than $1.5 billion of equipment leasing experience, provides a low-cost way for commercial and industrial companies to own solar systems in 6 or 7 years.
A traditional operating lease with attractive purchase options and efficient use of tax benefits (aka tax lease) has long been used as an alternative method of financing equipment acquisitions. Now available from LFC for solar projects in all 50 states, it appeals to companies that cannot otherwise benefit from the federal energy ITC, or want energy savings and off-balance sheet treatment without the complexity and long-term entanglement with a power purchase agreement. Unlike other solar leases, LFC’s lease provides the lessee with more benefits (listed below) than just energy savings.
MONETIZATION OF ITC: A PROBLEM FOR PRIVATELY OWNED COMPANIES
Most privately owned companies are S Corporations or LLCs. These are pass-thru tax entities, meaning the federal energy investment tax credit (ITC) as well as the company’s income is reported on the personal income tax returns of their owners. While many of these companies are profitable and financial strong, they are dissuaded from acquiring a solar system when the tax credit exceeds the amount of the owner’s tax (often for reasons unrelated to the company).
TAX LEASE SOLUTION
LFC, the Lessor, monetizes the ITC and provides a company, the Lessee, with lower monthly payments than otherwise available…and the payments are fully tax deductible. The same as leasing a company car!
BENEFITS
- All-in acquisition cost at a substantial discount from original invoice price.
- No up-front capital cost and low monthly payments improve Lessee’s cash flow.
- Lease payments subsidized by Lessor’s monetization of the ITC.
- Lessee options to own the solar system after 6 and 7 years.
- Up-front utility rebates and government incentive payments for Lessee.
- Solar Renewable Energy Certificates (SRECs) for Lessee.
- No complex accounting and tax records to set up and maintain.
- No construction period financing costs when advance lease commencement (subject to approval of contractor and project).
