House solar panels and other alternative energy sources have seen a surge in popularity over the last decade. Solar energy is not only great for the environment, but it can also save you a lot of money in the long term, along with adding value to your home. If you’re planning to sell your home in the foreseeable future, you may be wondering whether solar panels are a smart investment.
Buying versus Leasing Panels
Do you own your home solar panel system, or are you leasing it? The answer can mean the difference between increasing your home value and losing out on a sale. Two separate federal studies found that a solar panel system owned by the seller added an average of $15,000 to $20,000 to the home’s final sale price. That being said, having solar panels is a great way for adding value to your home. The FHA requires that the value of your energy system be included in your home value assessment, adding to the appraisal value. Buyers are willing to pay a premium for a home with a solar energy system.
However, a leased system can have the opposite effect. Solar panel use has jumped tremendously due to programs allowing homeowners to lease the systems rather than buy them. These lease programs are appealing because they eliminate the hefty upfront cost of solar energy systems, but real estate experts believe there is a hidden cost: potential buyers shy away from buying a home with a leased system. Leases typically have a term of up to 20 years, so a buyer faces the prospect of paying the remainder of the lease for years to come. The amount of the lease can even have a negative impact on the buyer’s mortgage eligibility. Additionally, the value of a leased system is not included in the appraisal value. Some homeowners have had to pay out the remainder of the lease in order to sell their house.
If you own your solar energy system, it will pay dividends come tax time, but the total savings will depend on where you live. Government incentives vary by state, county, and city. Currently, you can use Form 5695 to claim a federal tax credit of 30 percent of the initial cost of your solar energy system. This amount is taken directly off the taxes you owe. If your credit exceeds the amount you owe, you can’t cash it in, but you can roll it over to the following tax year. Check the Energy Department’s website for state-level incentives. Not only will having solar panels on your home save you money with great tax benefits, but you will find it adding value to your home as well.
If you’re considering selling your home and you own or lease solar panels, a real estate professional is a great resource. Call Diane Beckmann at 845-709-4758 to find out more about how solar energy systems can affect your real estate sale.