Will Adding Solar Panels Increase My California Property Taxes?



Will Adding Solar Panels Increase My California Property Taxes?

Visual representation of what a solar consultation looks like in the home.

Adding solar power to your home can be a great way to save on monthly electric bills. With the efficiency they provide, solar panels can dramatically lower your rates. 

With California’s solar-friendly weather and shared ambition for an environmentally sustainable future, installing solar panels simply makes sense for homeowners. But do solar panels increase property taxes in California? 

You’ll be happy to hear the answer is no.

Do Solar Panels Increase Your Taxes?

Thanks to California’s Active Solar Energy Tax Exclusion, homeowners can install solar panels today without fear of their property taxes going up. This incentive protects homeowners from any impact on their property taxes through Jan. 1, 2025. It’s an excellent opportunity to move to solar—just be sure your installation follows the exclusion’s code.

Active vs. Passive Systems

The exclusion is designed to help California homeowners add solar energy to their homes without facing higher property taxes on top of installation costs. But, it must be an active energy source.

Passive solar energy upgrades like greenhouses, for example, don’t qualify for the exclusion. An active solar energy system will always be thermally isolated from the space where they supply energy, and must be powerful enough to provide the home’s electricity.

What Does the Exclusion Mean for California Homeowners?

The approval of the Active Solar Energy System Exclusion means that any time before January 1, 2025, the assessment of an existing property won’t go up or down as a result of installing a solar power system. This exclusion for solar panel installations comes as part of a new construction exemption aimed at helping homeowners transition to solar energy.

An Important Distinction: An Exclusion Is Not the Same as an Exemption 

There are plenty of upsides to installing solar power for your home, but it’s important to understand the difference between an exclusion and an exemption. California’s Active Solar Energy Tax Exclusion is a new construction exclusion instead of an exemption. This means installing solar power in a home will not be treated as new construction, which would normally cause your home to be reassessed. 

New construction is always assumed to add value to a home and thus raise the assessed taxes owed. By excluding solar installations from this classification until 2025, your property won’t be reassessed for new construction until then.

Is It Harder to Sell a House with Solar Panels Installed?

For the average buyer, solar is a huge feature. Installing solar panels can increase the resale value of your home. Findings from the US Department of Energy’s 2013 report revealed that homes were shown to sell for an average of $15,000 more with solar panels installed. In fact, in the near future, it may be much harder to sell a home without solar—especially in California.

California’s Going Solar

Adding solar power now, while you can take advantage of the tax advantage, is a smart move in the right direction. In 2018, the state of California mandated all new homes must include a solar photovoltaic (PV) system capable of producing enough energy for the home. Even though existing homes are exempt, if you’re planning any major upgrades or substantial home improvements, you’ll be required to comply as well.

It’s better to make the move to solar now while there’s an incentive to delay a significant property tax increase.

Does California Have a Solar Property Tax Exemption?

California doesn’t have a tax exemption for installing solar power on your home. But fortunately, there is a federal exemption that lets you save 30% claimed on your federal income tax by installing a solar PV system. 

And there are other ways you can save, even without a California solar property tax exemption.

2 Other Ways to Save with Solar Panel Installations

In addition to the above state exclusion and federal exemption, the following are two more ways to save.

    1. DAC-SASH

The DAC-SASH program was created by the California Public Utilities Commission (CPUC) and runs all the way through 2030. It was established to help reduce costs for low-income households in disadvantaged communities by providing financial incentives for installing rooftop solar panels.

     2. SGIP

CPUC also designed the Self-Generation Incentive Program (SGIP), providing a rebate for distributed energy resources. To qualify for the rebate, homeowners must install any qualifying technology, which includes solar panel systems.

Sun-Powered Peace of Mind

Reducing monthly electricity costs is a great incentive. But generating electricity from the sun’s power is a profound step in reducing your reliance on less sustainable energy sources. Knowing you’re powered by clean energy that can’t be depleted instills you with a confident assurance you can treasure for the life of your home.

Solar can also keep the lights on during a power outage or rolling blackouts if you have a battery backup system. And, with California’s net metering, you can even earn money back by sourcing your excess power to local electricity suppliers.

Invest in Your Future Today

Adding solar-powered energy is a meaningful way to put more value into your home. Solar panels play an important role in green living, placing your trust in a cleaner, more sustainable future for years to come.

Ready to invest in solar energy? Contact Current Home to learn more today.