As a builder, have you been inundated with chatter of solar lately?
We can try to run from it, but we can’t hide for long nowadays.
Renewable energies have gone mainstream.
You see it everywhere you look.
Solar panels are on everything: streetlights, parking meters, and sitting right next to your local power plant.
And now, more than two million homes in the US have solar installations.
Because the cost of monocrystalline panels and batteries has plummeted before our very eyes.
And solar reduces their dependency on a local utility company and their ever-increasing rates.
In turn, solar has become a ‘must-have’ feature for homebuyers.
According to the Office of Energy Efficiency and Renewable Energy, buyers are willing to pay a premium for solar power.
How much exactly?
4.1% more per home – and that’s straight profit to pad your bottom line.
Couple that with the fact that homes with solar panels sell 20% faster than those without.
Now, this is something to get excited about.
But here come the screeching breaks.
Homebuyers want to know, “Do solar panels increase property taxes?”
Obviously, the answer will impact their decision.
After reading this article, you’ll be chompin’ at the bit to field your next buyer’s question.
Do Solar Panels Increase Property Taxes?
Homebuyers are eager to know because who wants to pay more?
Yet, the answer depends.
Solar panels increase the value of a home, but only if the homeowner owns the solar array.
If your buyer leases their system, they’ll get financially short-changed, and you’ll run into some major headaches! Check out why below:
Since your buyer would be purchasing a home that includes a solar array, the home’s stated value would indeed be higher.
*As a side note, this higher price point is the primary reason builders are interested in incorporating solar.
A homeowner pays property taxes every year based on the tax rate and their home’s assessed value.
This would seem to indicate higher property taxes, which, in some cases, is true.
However, many homeowners don’t have to pay higher rates due to state exemptions for solar systems.
How Do Solar Tax Exemptions Save Homeowners Money?
Property taxes are high enough these days.
Fortunately, many states offer incentives to homeowners who opt for renewable energy, including solar.
One incentive is a tax exemption for solar panels.
This system can deduct the value the solar panels add to their home from the house’s total value. Their property taxes are then calculated based on this adjusted number.
At a 1.5% property tax rate, homeowners would save $225 per year in taxes for solar panels that add $15,000 to their home’s value.
Who Qualifies for Property Tax Exemptions for Solar?
The home must be located in a state that offers property tax exemptions for residential homes to qualify.
While many states offer this incentive, not all do.
Currently, 25 states and the District of Columbia provide a 100% exemption, including:
Meanwhile, seven other states allow local property tax exemptions or partial exemptions.
When deciding whether or not to include a solar upgrade, you should know whether the state you’re building in offers this incentive. This information may impact how quickly your homes sell.
In states that offer no incentives, the answer to the question, “Do solar panels increase property taxes?” is yes.
Homeowners are likely to pay more in property taxes due to the increased value solar panels add to their homes.
Are There Other Incentives That Would Encourage Buyers to Choose Solar?
Property tax exemptions are not the only incentives that save people money when choosing solar.
1) In some locations, such as New York City, local governments offer a property tax abatement program.
These programs allow homeowners to deduct a percentage of the solar panel system’s cost, as well as installation costs, from their property taxes for a designated number of years.
2) Another state-level inducement comes in the form of sales tax exemptions.
In addition to the five states that don’t have a sales tax, 17 states provide exemptions for purchasing solar panels.
While builders are paying the upfront purchase, you could pass the savings on to your homebuyer as an incentive accompanying the system.
3) The final financial incentive is the 26% Federal Solar Tax Credit.
Technically, since you purchased the system, you can claim this tax credit. But there might be a benefit for you to pass it on to the homebuyer.
It may boil down to how quickly you can sell the home and how much profit you make on the upgrade over the tax credit amount.
How Can You Break into the Solar Game and Increase Your Profits?
Unbound Solar has everything you need to incorporate solar into your build process immediately.
We specialize in designing, building, and delivering custom solar systems that integrate seamlessly into your existing building plans — no need to go back to the drawing board.
Plus, with access to a wide range of equipment from over 50+ reputable manufacturers, you won’t have to make sacrifices in quality or aesthetics.
If you’re interested in learning more about our Homebuilder Partnership Program, contact us today or call 1-888-665-1260!