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Do Solar Panels Increase A Home’s Value?
Making the switch to solar energy comes with a number of financial incentives. The most obvious is that it allows you to dramatically reduce and in some cases eliminate your monthly electric bills. Additionally, installing solar panels may make you eligible for tax credits, rebates, and other perks.
And then there’s the question of home value. It’s often assumed that installing solar panels will increase the value of your property, but is this actually true? And if so, then by how much can you expect your resale value to rise?
A solar installer can talk to you more about the financial benefits of solar installation in your area. For now, consider a few general tips and guidelines.
By How Much Will Solar Panels Increase Home Value?
To start with, it’s fair to say that installing solar panels helps most homeowners increase their property values. The question is by how much. Here, there have been a number of studies, all of them yielding slightly different results. Some studies have shown that installing solar panels increases a home’s value by around $5,000. Others show increases of about four percent of the home’s total value.
It’s especially noteworthy that, based on these figures, installing solar panels will usually increase a home’s value by more than the total cost of the installation, thus offsetting that steep solar startup investment.
Which Factors Influence the Value of Solar Panels?
There are a number of specific factors that can influence the additional value that solar powers bring to your home. Some of the most salient factors include:
- Your location: Simply put, solar panels are more beneficial in some geographies than in others. Specifically, solar panels provide more value in areas that get a lot of natural sunlight, and in areas where electric costs tend to be pretty high.
- Local solar installation prices: The cost of solar installation can also vary by geography. If a buyer would save money by purchasing a home with a system already installed, this can significantly enhance the home’s value.
- System output: Larger systems that generate more electrical power tend to add more value to the home.
- System age: Solar systems depreciate just like anything else. If you have an older system, you’ll need to account for that depreciation.
- System replacement value: Similarly, how expensive or difficult parts of your system would be to replace can impact the overall added value of the system.
These are just a few of the factors to bear in mind as you try to determine how valuable it would be to install a residential solar system.
Do Buyers Want Homes with Solar Panels?
Another key question to ask: Are buyers actually looking for homes that have solar panels installed?
The answer can vary from area to area, depending largely on solar literacy. (If local homeowners are well-versed in the value of solar power, they’re more likely to seek it when house hunting.)
With that said, there is considerable evidence to suggest that homebuyers take energy efficiency seriously. Reports from leading real estate organizations consistently show that around four out of five homebuyers say that energy efficiency is something they desire from their next property. Solar panels can meet that desire.
What About Property Taxes?
Another question worth pondering: How do solar panels affect property taxes? After all, when your home values go up, it typically means your property taxes go up, too.
The good news is that, as of 2022, 37 states offer property tax exemptions for solar installations. What this means is that, in these states, if solar panels cause your home values to rise, your taxes do not rise accordingly.
Before installing a residential solar system, it may be worth checking to see whether your state offers this exemption.
Do Solar Panels Make Sense for Your Home?
As you try to decide whether it makes sense for you to go solar, you’ll certainly want to account for the potential increase in your home resale value. Some other factors to consider include:
- How much you spend on utility bills each month.
- How much sun exposure your home gets throughout the year.
- Financial incentives available to you, including the federal tax credit but also local or state-level credits and rebates.
Make a Smart Choice About Solar Power
Solar installation may not be the wisest decision for everyone. However, if you pay a lot for electricity and if your home tends to get plenty of sunlight, there may be real financial incentive for you to make the switch. And yes, that typically means enhancing the overall value of your property.
How can you determine for sure whether solar panels would increase your home value? The next step is consulting with a local installer or solar energy expert, who can provide you with some more location-specific calculations.
