When considering a purchase as large as a residential solar system, prospective solar buyers want their questions to be answered by the company that best fits their needs. At Blue Raven Solar, we commonly hear:

 

• How much will solar cost?  
• How much can solar reduce my electricity bill?  
• How many years will it take for the solar savings to be greater than the total cost?  
• What is the federal investment solar tax credit?  
• How long will my solar panels last?  

 

However, one question often overlooked is the long-term effect of solar power and the impact it can have on increasing the home’s value. This comprehensive guide explores both the potential advantages and disadvantages solar panels can have on home value, equipping you with a more complete picture of their influence.

How Much Will the Value of My Property Increase?

While predicting an exact value increase by adding a solar panel system to your roof is difficult to calculate, understanding the factors at play, you can leverage the investment and increase your property value. 

 

Solar panels offer many benefits for homeowners. Reduced energy bills, energy independence from the utility grid, and reducing their environmental emissions are just a few. While the exact impact on your property value can vary, case studies suggest a customized solar panel system can be a significant selling point. 

 

Zillow, a leading real estate platform, found homes with solar panels installed sell for around 4.1% more than those without them. Additionally, studies by the Appraisal Journal indicate homeowners can see a value increase of around $20.00 for every dollar saved annually on energy costs. The National Renewable Energy Laboratory (NREL) has conducted further research into the connection between solar panels and increased property value, reinforcing the idea they are mutually beneficial.

Key Factors Affecting Home Value with Solar

The potential increase in your property value from a solar panel installation depends on several factors. Some include:

 

• The size of a custom solar panel system: The size of a photovoltaic (PV) system can impact your potential cost savings. Larger solar panel systems generate more electricity, reducing reliance on the utility grid and lowering electricity bills. In states with net metering programs and policies, a larger solar system can also maximize savings by selling excess solar power back to the utility grid. It is important to note, while all states have net metering or distributed generation rules, some states delegate additional regulations to city or county levels. This means your system might be affected by both state and local regulations.  
• The age of solar panels and/or condition: Solar panel technology has continued to advance. While newer panel models, brands, and sizes might result in higher efficiency, many existing solar panel systems are still quite effective. Solar panels installed 20 years ago can still generate 70-80% of their original output, effectively meeting your energy needs and potentially adding value to your home. The impact of age on efficiency rates varies, but well-maintained rooftop solar panels from earlier eras can still be a valuable asset to your property.  
• Location of the solar panels installed: The potential value boost from having solar panels can vary depending on your location. States with high electricity costs, tend to see a greater overall value increase for solar-equipped homes. Additionally, sunnier regions with milder climates like Nevada, Florida, and South Carolina experience more reliable solar output, further enhancing system value.  
• The Federal Investment Tax Credit (ITC): The Inflation Reduction Act extended and increased the Federal Investment Tax Credit (ITC) to 30% through 2034. This means you can deduct up to 30% of your system’s cost from your federal taxes for the current or following year, based on when it was installed and energized.  

 

The ITC reduces the homeowner’s out-of-pocket expense, not the overall value of the solar panel system. While the tax credit lowers the initial cost associated with installing a rooftop system, a $30,000 system with a $9,000 ITC credit would likely still be appraised in the $30,000 range.  

 

Home value and equity varies by these factors, but it typically does not decrease a home’s value. In fact, a custom PV system can contribute to making your home sell quicker, especially if your system is paid off.

When Can Solar Increase My Property Value?

The way you choose to finance your solar panels can impact your home’s value. Owning the system, rather than leasing, allows you to claim available incentives and tax credits, which can make your home more attractive to potential buyers, and could also lead to a higher selling price. Leasing or financing options like Power Purchase Agreements (PPAs) offer lower upfront costs, but the benefits belong to the solar company owning the panels.

Owned vs. Leased Solar System

Owning a paid-off rooftop solar system offers several advantages:

 

1. You control your energy costs. Owning your solar panel system frees you from relying on utility companies and their sudden electricity price hikes.
2. A paid-off system is valuable. Once the loan is paid off, solar panels essentially become a paid-for improvement on your property; therefore, increasing its overall worth. This translates to a higher potential selling price.
3. Battery backups allow you to store excess solar energy. This stored energy can be used during power outages or at night, providing additional security and peace of mind, especially in areas prone to grid instability.  

 

Homes with solar, regardless of ownership, often attract eco-conscious buyers who value sustainability and energy efficiency.  

 

The majority of solar benefits can still extend to homes with financed solar panel systems. Leases and Power Purchase Agreements (PPAs) offer predictable energy costs and a reduced maintenance burden. 

 

Solar panel leasing and PPAs are financing options eliminating upfront costs and ongoing maintenance responsibilities. While financed solar systems offer exclusive benefits, the potential increase in property value might accrue to the future homeowner. Additionally, you typically cannot claim federal or local solar incentives with a leased system.  

 

Ultimately, the decision of whether to purchase or lease a solar panel system depends on your individual priorities and financial goals.

Is There a Situation Where Solar Panels will not Affect My Property Value?

While solar panels can generally be considered a positive addition for home value, there are a few situations where their impact might be less significant:

 

• Limited Market Demand: In areas with low electricity costs like Nebraska, North Dakota, and Louisiana, or where environmental consciousness is not a selling point, solar buyers might not be willing to pay a premium for solar panels.  
• Poorly Maintained Systems: Solar panels require simple upkeep and regular maintenance. Failing to keep up with maintenance can damage solar cells or panels, making them less efficient. This could affect a homebuyer’s decision to factor in replacement costs; decreasing any value.  

 

While these situations do exist, remember investing in a rooftop system typically does increase property value. For most homeowners, the advantages outweigh the disadvantages. Before you invest in solar panels, it is wise to consider both the local market trends, and what you can do to ensure your future system’s value. This includes researching electricity costs and buyer preferences in your area.

Can Solar Decrease My Property Value?

Solar panels themselves will most likely not decrease your property value. However, consider these potential issues which could influence the value and those interested in purchasing your home:

 

1. Improper Installation: A faulty solar panel installation, like any home improvement, can damage your roof or electrical system. Reputable solar installers, like Blue Raven Solar, offer warranties and guarantees to mitigate this risk. For example, we offer a 2-year service warranty, a 10-year workmanship warranty, and manufacturer warranties for up to 25 years on equipment.
2. Financing Considerations: Single-family homes with outstanding loans, leases, or PPAs might make some buyers hesitant to take on additional payments. While leases may be a great way to manage upfront costs, they can introduce this additional layer of complexity to future buyers. There are, however, options to address buyer hesitation – here are some scenarios to consider:

 

• • Loan Assumption Option: The buyer could potentially take over the remaining loan payments for the solar panel system, as part of the home purchase agreement. This can be an attractive option for home buyers who value the long-term benefits of solar energy and ownership.  
  • Price Adjustment Option: In some cases, depending on the competitive housing market and buyer interest, homeowners may need to consider lowering their desired sale price of their home to compensate for solar loan payments.  
  • Loan Payoff at Closing Option: The homeowner can use a portion of the sale proceeds to pay off the remaining balance of the solar loan at closing. This simplifies the sales process but may have tax implications depending on the specific loan or lease agreement. Please consult a financial advisor regarding potential tax consequences prior to moving forward.

 

Important Consideration: A few homebuyers may prefer homes without solar panels. If they wish for the system to be removed from the home, this could be considered the worst-case scenario. The homeowner would be responsible for the solar panel system removal fees and would still be responsible for any outstanding or pending loan or lease payments.  

 

In any situation, it is important to discuss your questions, factors, and financing options with your chosen solar panel provider to ensure a smooth transition

Will My Property Tax Increase with Solar Panel Installation?

In many states, installing solar panels is seen as a valuable home improvement, like a renovated kitchen or bathroom. Since property taxes are often based on assessed property value, an increase in value could lead to a higher tax bill. However, the potential tax savings from solar power generation will often outweigh any property tax increase.  

 

The good news is many states and localities offer tax exemptions specifically for solar installations. These exemptions tell tax assessors to disregard the increased value of your property due to your rooftop solar panels when calculating your property tax. This means you can reap the benefits of solar power without the concern of a substantial tax hike. To determine your location’s specific tax exemption policies, check your state’s local government website, or contact your local tax assessor’s office to learn more.

Should I Buy Solar to Increase the Value of My Home?

The answer is yes – it makes sense to invest in clean, renewable energy to increase the value of your home. Solar energy is best viewed as a long-term investment, not a singular way to increase home resale value.  

 

The appeal of solar goes beyond boosting resale value. While financing options may involve loans, numerous other advantages make investing in a rooftop solar system worthwhile. Blue Raven Solar helps homeowners start saving on day one of system energization through low prices, local incentives, and more.

How to Save with Solar

The most immediate form of savings with solar is generating clean electricity for your home, which reduces your reliance on the utility grid and leads to reduced monthly electric bills. This translates to lower operating costs for future homeowners, making your property more attractive in the market.

 

For any extra electricity your solar panel system has produced, many utility companies offer net metering programs. Net metering allows you to earn credits for any excess electricity your solar panels generate which is fed back into the utility grid. These credits can be used to offset the cost of the electricity used when your panels do not produce enough or during high peak hours.

 

Going solar also often comes with a variety of government incentives and utility company rebates. These can significantly reduce the upfront costs, making solar more accessible. 

 

• Federal Investment Tax Credit (ITC): This federal tax credit currently offers a 30% tax credit on the cost of your solar energy system. This is a great way to offset the initial investment.  
• State and Local Incentives: Many states and localities offer additional financial incentives for solar installations. Check with your state’s energy department or your local utility company to see what programs are available in your area.  

 

While most solar incentives cannot be directly applied to your loan or mortgage, combining these financing options with the factors discussed above can still significantly reduce your overall energy costs, and in turn, could potentially shorten your loan repayment period.

Why You Should Partner with Blue Raven Solar

The decision to install solar goes beyond reducing your energy bills. It’s a statement about sustainability and potentially increasing your home’s value, too. 

 

At Blue Raven Solar, we are professionals dedicated to making your solar journey smooth and successful. We strive to offer the best solar experience by combining efficiency, quality, and reliability in both our products and services.  

 

We also understand the importance of affordability. We currently offer flexible financing options alongside our premium materials and innovative solar technology. This ensures your custom-designed solar panel system optimizes energy production, maximizing your savings and potentially increasing your home’s value for years to come. 

 

Are you ready to unlock the financial and environmental benefits of solar while potentially increasing your home’s value? Click the link below and get a free, personalized quote. Our team will answer your questions, walk you through different financing options, and design a solar solution based on your home’s needs.

Frequently Asked Questions