Not only does a solar system pay your electric bill, it also makes your property more expensive on the market. Even if you don’t plan on living in one house for your whole life and may move in a few years, the system is likely to pay for itself anyway. How is that? Let’s dig deeper into the relationship between solar panels and property value.
Getting a solar system: costs and prospects
The answer to the question “How much does a home solar system cost” depends on where you live, how big of a system you need and when are you asking the question. At the beginning of the 2020s, solar panels were 80% cheaper than they were a decade before. During the pandemic, their prices went up a little and now they are coming back down.
In the US, the price of a 7-kilowatt solar system can be anywhere from $15,000 to $25,000 with installation. A lot depends on the equipment you choose and the way you decide to go about the installation. A solar system includes not only solar panels but also an inverter, wiring and mounting. You can also add energy storage but batteries significantly increase your expenses. The labor makes up to 50% of your solar system’s cost. Usually, you can’t install a system by yourself and connect it to the grid unless you are a certified electrician.
The good news is that some of the money is going to come back to you shortly through the Federal Solar Tax Credit. This incentive allows you to deduct 30% of your installation’s cost from income taxes. The cost includes expenses such as shipping and labor. So if your system comes for $15,000, you’ll be able to claim up to $5,000 back.
The average payback time of a solar system ranges from 6 to 10 years. If the system covers your electric consumption fully, it means that it saves you about $100-$200 monthly. The ROI primarily depends on how expensive the electricity is in the area and the net metering policy of the state. For example, New York is not a particularly sunny place but a PV system still gives a fine ROI there just because of how high the electric bill can be.
Looking at property value and tax concerns
Solar panels last for over 25 years. A lot can happen in this time and you may decide to resell your house. But don’t rush to remove the panels and pack them in a truck hoping to install them at a new place! Turns out, a solar system on top of your roof makes your house more expensive on the market.
On average, houses with solar systems installed cost about 4.1% more, according to the study of the Zillow group. In New York in particular the average increase in cost reaches 5.4%. For the median-valued home, that translates to about $10,000 extra on top of your house value. What it means is even if you decide to move, by selling your house with a PV system you will still get your investments in solar panels back.
Pay attention to Property Tax exemption in your state
But wait — if the value of my house grows, does it mean that my taxes will also go up? Not necessarily. This depends on whether or not your state offers a property tax exemption for solar panels.
The way tax exemption for renewable energy systems works is simple: your solar panels are not included in the assessment of your home’s value and thus don’t raise your taxes. California, Florida, Texas, and many other states have adopted this initiative. Please note that in some areas the exemption only lasts for a certain time — say, 10 years — or allows only systems of a certain size to be exempted — say, up to 10 kilowatts in size.
