Adding a solar panel system to your home and getting the most out of it can be a bit of a challenge. Which contractor should you go with, do you want to opt to own outright, and what brand will work the best for your home needs? Another issue that can be confusing for homeowners is sales and property taxes. Keep reading this article for everything you need to know: tax exemptions defined as well as how you can save money with them.
The Main Types of Solar Tax Exemptions
As a homeowner, you may be eligible for solar tax exemptions. These incentives either save you money on the initial costs or long-term investment costs that come with installing solar panel systems in your home. While you will need income to claim income tax credits, for instance, it is not necessary to have income for you to be eligible for solar exemptions.
There are two main types of tax exemptions available for residential properties: solar property tax exemptions and solar sales tax exemptions.
Solar Property Tax Exemptions
Installing solar panels onto your home increases the property value. Every time the value increases on a property, the state and local tax liability do as well. With solar property tax exemptions, you can be sure that you won’t be charged extra on your property taxes.
Solar Sales Tax Exemptions
With this exemption, you will have an incentive for your decision to go solar in your home. Depending on the state, you could pay up to 9.5% sales tax on the overall costs of solar panels. While solar panels have decreased significantly – especially over the last few years, that can still be a significant tax burden to shoulder.
How Are Tax Exemptions Calculated?
Property assessment is difficult to agree on, in general, and adding solar panels to homes are no exception. This might be even more so the case. Because even though generating your electricity with solar adds value to your home without question, a standard of value has yet to be established and universally agreed on. Therefore, the property value is often widely subjective and based largely on the individual assessor.
Exemptions Vary By State
Solar tax exemptions differ by state, and not all states offer tax incentives. For this reason, you will want to be sure to do your homework before deciding to install – don’t just assume. The positive news is that twenty-nine states already have tax incentives that exempt property owners from tax liabilities for either some or all of the value that solar adds to their home.
As we make our way through another election cycle, renewable energy is as popular an issue as ever. The great state of California is the best in the nation for solar power, and this is reflected by state tax exemptions. With that in mind, there has never been a better time to install a solar panel system in your home, no matter where you live. If you are located in California and have further questions about solar, don’t hesitate to give us a call today.