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Federal Tax Credit 2021 Transition

The Federal investment tax credit for going solar is decreasing from 26% to 22% in 2021. Sunlight will be providing a few options for installers to transition their sale of Sunlight solar loans from a loan product with a 26% voluntary payment prior to reamortization to a loan product with a 22% voluntary payment prior to reamortization (each, a “voluntary payment”). Sunlight is providing this flexibility to installers to select a transition date to more closely align with their expected installation timelines. Please consult with your manager or Sunlight representative to confirm your company's transition date.

Starting on your company’s transition date, Sunlight will calculate your customer’s first 17 monthly payments assuming that your customer will make a voluntary payment equal to 22% of the total loan amount by the 18th month of the loan (instead of the current voluntary payment of 26% of the total loan amount). This 22% voluntary payment will be reflected in loan quotes and loan documents generated on or after the company’s transition date. As a result, quotes generated on and after your company’s transition date will have a higher monthly payment amount that corresponds to the lower voluntary payment percentage.

What will change?

1) The payment calculator will reflect the new voluntary payment percentage starting on your company’s transition date. Before that, there will be a disclosure notifying you of your company’s transition date.

Before the transition date

On and after the transition date


2) Sunlight will provide reminders throughout the credit application process to make it clear whether a loan assumes either a 26% or 22% voluntary payment.



How are customer accounts effected during this transition?

What will the voluntary payment assumption percentage be if a customer account was created before the transition date?

If your customer’s account was created before your company’s transition date, the customer’s quote and loan documents will reflect the 26% voluntary payment. If you wish to change the quote and loan documents to a 22% voluntary payment instead, simply click into your customer’s account, scroll to the bottom, click the “New Loan” button and follow the instructions to fill in the loan details and create a new quote.

By creating a new quote, new loan documents will be generated, and your customer will need to sign those new loan documents that include loan payments that assume a 22% voluntary payment. Sunlight makes no representations or warranties as to the amount of the solar investment tax credit or your customer’s eligibility.

What if your customer submitted a credit application before your company’s transition date?

If your customer submitted a credit application before your company's transition date, the quote will reflect a 26% voluntary payment and will still be honored until the customer’s credit approval expires, which is 180 days after credit approval. Sunlight makes no representations or warranties as to the amount of the solar investment tax credit or your customer’s eligibility.

What if your customer received loan documents before your company’s transition date?

Any loan documents emailed to your customer before your company’s transition date will reflect a 26% voluntary payment and will still be honored until your customer’s credit approval expires, which is 180 days after credit approval. Sunlight makes no representations or warranties as to the amount of the solar investment tax credit or your customer’s eligibility.

What if your customer received loan documents with a 26% voluntary payment and would now like to update the loan documents to a 22% voluntary payment?

On or after your company’s transition date, if your customer wishes to change the loan terms to reflect a 22% voluntary payment, simply click into your customer’s account, scroll to the bottom, click the “New Loan” button and follow the instructions to fill in the loan details. Just make sure to enter all the same loan information (i.e. loan amount, loan term and APR). Sunlight makes no representations or warranties as to the amount of the solar investment tax credit or your customer’s eligibility therefor.


What if your customer signed up with a loan assuming a 26% voluntary payment but a change order is requested after your company’s transition date?

The customer’s new quote will reflect a 22% voluntary payment. It is critical to explain to your customer the updated increase in their monthly payment as a result of the change order and to advise your customer to consult with a tax advisor to understand their eligibility for the investment tax credit. Sunlight makes no representations or warranties as to the amount of the solar investment tax credit or your customer’s eligibility therefor.

Example of how to explain this change:

“When we initially signed you up for a solar loan through Sunlight, the loan structure was calculated assuming that you would make a voluntary payment of 26% of the loan amount in the first 18 months. Sunlight has transitioned their loans to a 22% voluntary payment assumption starting on [X date]. This change is in accordance with solar investment tax credit eligibility criteria for any systems placed in service on or after January 1st, 2021. With this adjustment, your monthly payment will reflect a slightly higher payment.

This adjustment has been made so that we can provide you a fully transparent experience given this upcoming change in the solar tax credit. If you choose to make more then a 22% voluntary payment within the first 18 months of the loan your monthly payment will be reduced starting on month 18 through the end of the loan term.

If you’d like, I can use Sunlight’s payment calculator to give you some estimate of what that payment after month 18 could look like if you want to make a voluntary payment above 22% of the loan amount in the first 18 months of your loan.

We recommend that you consult with your tax advisor for guidance to determine if and how the solar investment tax credit will apply to you”

What is the Solar Investment tax credit?

The solar investment tax credit is a non-refundable federal investment tax credit that can be claimed against your customer’s tax liability for up to 26% of the cost of your customer’s solar system to the extent the system is placed in service on or before December 31, 2020. The solar investment tax credit will automatically reduce to 22% for any solar systems placed in service on or after January 1, 2021. Please suggest that your customer consult his or her tax advisor for guidance relating to the solar investment tax credit, including whether or not your customer is eligible. Sunlight makes no representations or warranties as to the amount of the solar investment tax credit or your customer’s eligibility therefor.

How, if at all, will the solar investment tax credit be factored into your customer’s solar loan through Sunlight?

Your customer’s loan agreement will show the estimated monthly payments in two scenarios. First, monthly payments will increase after your customer’s 17th payment if your customer does not make a voluntary payment on or before the 18th payment that is equal to the voluntary payment. Second, your customer’s monthly payments for the 18th month and beyond will remain the same as payments 1-17 only if your customer makes a payment in an amount equal to the voluntary payment. The amount of the voluntary payment is determined by the quote date on which the loan agreement is generated. Quotes generated prior to your company’s transition date will reflect a 26% voluntary payment. Quotes generated on or after your company’s transition date will reflect a 22% voluntary payment. Please inform your customer to review his or her loan agreement for additional details. Your customer should consult his or her tax advisor for guidance relating to the solar investment tax credit. Sunlight makes no representations or warranties as to the amount of the solar investment tax credit or your customer’s eligibility therefor.

How does my customer know if he or she is eligible for the solar investment tax credit?

Your customer may qualify for certain federal, state, local or other rebates, tax credits or incentives. Sunlight makes no representation or warranty as to whether or not your customer is eligible for any such rebates, credits or incentives or your customer will receive any such rebates, credits or incentives. Please tell your customer to consult his or her tax advisor for any guidance.

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