Solar panels are an excellent investment for most homeowners, but understandably so you want to know if there are any “hidden costs” when you install your panels. One of the most common questions is if installing solar panels will cause your property taxes to increase due to the increase in your home’s value.
The good news is that the answer is no!
While adding solar panels to your home does indeed increase the value of your home, you will not be hit in the wallet come tax time. California offers an exemption.
Currently, there are only two ways your property is reassessed by the county. The first is if you sell/buy a new home, your home will be assessed and your property taxes will most likely increase, and the second is if you do a major renovation that requires you to apply for permits. While you do need to apply for permits to install a solar panel system, and as a result, your property value will go up. Still, you will not pay any additional property tax when you install new solar panels until the home is sold.
According to Solar Energy Industries Association, an average solar panel system can add around $15,000 more in value to your home. In turn, depending on your property tax rate, this could add several hundred dollars to your yearly property tax bill. So you can count that as significant savings when you install your solar system.
You may need to find out if there is an additional form to fill out to qualify for the tax break. Contact your local tax office to find out. It is usually a simple form that needs to be filled out and submitted to qualify for the break.
The bill (Senate Bill 871) allows for this exemption in place until the year 2025, so if you are considering installing solar, now is the time to do it so you can get a break on your property taxes. If you want to read more details on the bill, you can check it out here.
If you are considering solar panels, give one of our customer service representatives a call at Semper Solaris, and we can get the ball rolling on a solar panel system for you! We can go over a cost analysis and evaluate your roof and how much sun your home receives and discuss options with you.
What about sales tax? Is there an exemption for that?
While some states offer one, unfortunately, California does not have an exemption for sales tax on a solar panel system, so you will have to pay that tax.
Does California State offer a tax credit on my yearly tax return?
California used to offer a tax break on the purchase of solar panels, but it does not any longer. That went away in 2005. The only tax credit available is the Federal Tax Credit, which currently gives a 26% tax credit.