If you have been wanting to add solar panels to your home, but are worried that it’s going to increase property taxes, here is what you need to know when choosing to go solar.
The answer is no! Adding solar panels to your home does not increase property taxes. Though it may increase the overall value of your home, it won’t negatively affect you when it comes to taxes. You may also be able to receive money back in taxes for installing new solar panels.
There’s a lot more to know about how solar panels positively and negatively affect your home and the value they have on your home and your wallet.
How are Property Taxes Affected When Adding Solar Panels?
If you’re looking to add solar panels to your home, it does not effect your wallet when it comes to installing them on your own home. This may depend on different states, as well as counties, but overall it is most unlikely that your property taxes will be increased.
The property will be assessed when the home is being sold/bought. If there have been major renovations, such as solar panels, then the home will be need to be reassessed in order for property taxes to be accurate for new homeowners. Because you will have to apply for a permit to install solar panels, the home will be need to be assessed before being sold. The nice aspect for you, the homeowner, is that the home’s property value will most likely increase. Other than that, it is unlikely that by you installing the solar panels yourself will your property taxes increase while you continue to live in the home.
Do Solar Panels Increase the Value of a Home
More often than not, absolutely. In some studies, solar panels increase the value of a home by a minimum of $15,000. According to the U.S. Department of Energy, for every $1 saved in utilities per year, the value of the property increases by $20. However, you are only able to reap the rewards of selling your home for more is if you own the solar panels on your home. An appraiser can try to determine the value of the home with the leased solar system, but the likelihood that the leased panels will increase the value of the home is not likely. If you plane on installing solar panels, make sure that you own them and they will be sold as a part of the home.
What Effect Do Solar Panels Have on Home Owners Insurance?
Solar panels don’t necessarily change the insurance plan that you have on your home; what may need to be changed is the amount of coverage needed to protect not just the home but the solar panels as well. There is usually no need to add solar panel insurance to your plan, as solar panels are usually covered in most home insurance policies. Your premium may be raised in order to accommodate the cost of the solar panels. It just depends on what type of solar system you put on or in your home, such as ground-mounted panels, which may need a separate or additional policy.
Something else important to know is that with most insurance policies, there is no claim limit regarding how much money you receive for damage to your property. Because solar panels are attached to the home, they will most likely be covered in any circumstance.
Do You Receive Money Back in Taxes?
The long and short end of it is that if you install a brand new solar system to your home, you can receive a 26% tax credit from the federal government for investing in solar. Basically, what this means, is that you can get 26% of your costs back from installing solar panels; whether that be the equipment or the installation, whatever it is, 26% of that can come back to you. So, if you spend $10,000, then you get $2,600 back in your tax returns. You can only claim the solar panels if they are newly installed, not if they are old and have already been accredited.
You are only allowed to receive this money back if you own your solar system. Again, if the solar system is leased to you, you cannot claim it in your tax returns. The company who installed the solar panels on your home gets to claim the 26%, so it is important for you to own the system in order to get the money back while also saving on your utility bills.
Is it Harder to Sell a Home with Solar Panels?
The odds of your home’s value increasing with solar panels is great, and selling the home with solar panels may get you your money back. Homes with solar panels usually sell for more and are bought quicker, especially if the solar panels are newer. However, if you don’t own the solar panels on your home, then it may be more difficult to sell the home. The paperwork that comes with leased solar panels is more difficult and extensive; it’s easier to own the solar panels when you sell your home.
Many home-owners want a home with solar panels because it decreases the cost of utility bills, so it’s a great selling point for your home, plus sets your home apart from others. The value of the home is not only increased for you, but also the new homeowner, so both of you reap the benefits of having newly installed solar panels.
When you lease the solar panels, and choose to sell your home, it may be difficult to find someone who wants to take over your lease. If there is someone who wants to purchase the lease for the panels, but they don’t have good credit, that can also become a problem when trying to transfer the lease. If you can’t find someone to take over the lease, then you may have to buy yourself out of your own lease, which will make you lose money rather than be bought out. Remember, it’s difficult, but not impossible to sell your leasing contract.