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As homeowners increasingly seek sustainable and cost-effective energy solutions, solar panels have gained popularity. According to the Solar Energy Industries Association (SEIA), the U.S. installed over 19 GW of solar capacity in 2020, a 43% increase from the previous year. With this growth, many homebuyers and sellers are encountering a new aspect of real estate transactions: solar panels.
When buying a home with existing solar panels, it's important to understand the system's setup, ownership, and financial implications. There are three primary solar financing options: solar leases, power purchase agreements (PPAs), and direct ownership. Each has its distinct benefits and drawbacks.
In a solar lease, a third-party owner installs and maintains the system on your property. You, the homeowner, pay a fixed monthly rate for the electricity it produces, often at a lower cost than the local utility. A significant advantage of solar leases is the minimal upfront investment, usually only a small deposit. However, leases can complicate selling the property, as potential buyers may be deterred by the long-term contract and associated payments.
Power purchase agreements (PPAs) are similar to solar leases but differ in one key aspect. Instead of a fixed monthly rate, homeowners pay for the actual electricity the panels produce at a predetermined price per kilowatt-hour (kWh). Like solar leases, PPAs require little or no upfront investment but can make home sales more challenging due to the ongoing contract and payment structure.
Direct ownership of solar panels is the most straightforward option for homeowners, as they purchase the system outright. While the upfront cost is higher, there are several incentives that can help offset the initial investment. The federal Investment Tax Credit (ITC) allows homeowners to deduct 31% of the solar installation cost from their federal taxes in 2024. Additionally, some states and municipalities offer sales and property tax exemptions, rebates, and performance-based incentives. Direct ownership provides the most significant long-term savings and adds value to the home, but it does require a more substantial upfront financial commitment.
When selling a home with solar panels, disclosing the system's details and associated benefits to potential buyers is crucial. Marketing the home's reduced energy costs, decreased carbon footprint, and potential for backup power during outages can attract environmentally-conscious buyers and increase the home's perceived value.