It is widely documented that solar panels help homes sell faster and for more money. But while increasing home value is usually a positive thing, some homeowners wonder if it will trigger a property tax reassessment.
Some home renovations can increase your property taxes, but do solar panels increase property taxes? Luckily, for Arizona residents, the answer is no. This article will explain everything you need to know about the energy equipment property tax exemption in Arizona.
How do solar panels affect home value?
A solar-ready home is an asset that most home buyers are willing to pay more for in Arizona. Upgrading to solar systems increases energy efficiency while reducing the average monthly cost of electricity, making your property more appealing to buyers.
According to the Office of Energy Efficiency and Renewable Energy (EERE), the value of your home increases by $20 for every dollar you save in annual energy bills as a result of using solar energy. Also, homebuyers consider energy efficiency and independence crucial in any property and are willing to pay a premium price for solar-powered homes.
On average, homes with solar panels are sold for 4.1% more than comparable homes without solar. Also, an average-sized solar panel can increase the value of your home by about $15,000 depending on the location, system size, and electricity rates.
How do solar panels affect property taxes in Arizona?
While installing solar panel systems increases the value of your property, switching to solar energy comes with various federal and state tax incentives which shield you from any subsequent increase in property taxes. Therefore, you will not see any direct increase in property taxes after installing solar panels in Arizona until the home is sold.
Energy Equipment Property Tax Exemption
The Energy Equipment Property Tax exemption provides for a 100 percent tax exemption on the property’s increased value after solar panel installation in Arizona. In this case, solar energy systems are considered to add no value to your home, thus providing a good property tax break.
The maximum personal income tax reduction under the Arizona Residential Energy Tax Credit is $1000; however, it provides a 25% tax credit for solar energy systems you buy for your home. Also, you will enjoy a solar Equipment Sales Tax Exemption of 5.6% which reduces the installation cost upfront.
Federal Solar Tax Credit
In addition to the state credits, most Arizonans are eligible for a Federal Solar Tax credit, the residential clean energy credit. This federal credit indirectly reduces the cost of installing solar panels by lowering your total tax liability for the year you installed your solar energy systems and subsequent years, where applicable.
The Residential Clean Energy covers both solar panels and battery storage systems. This benefit allows homeowners to reduce their tax obligation by up to 30 % of their solar panel installation from their federal income taxes.
Considering going solar? Solar Optimum is here to help!
Are you looking to explore the benefits of solar energy in your Arizona home? Solar Optimum will give you the best solar energy solutions within your budget and guide you through the process of going solar. Contact us today to get a free quote.
