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How Much Does Solar Increase Residential Property Values



Have you noticed this article doesn't mention whether residential home property values increase when a photovoltaic solar electric power system is installed, but how much real estate property values increase.


Fact is …when it comes to solar electric power systems, the sun is money.


I have a couple of other often overlooked facts about solar and real estate benefits …we'll get to that in a minute. For now, let's talk about property values.


The property value increase has been known for years, the problem has been how to develop a simple formula to quantify the increase for real estate valuation.


Now, the Appraisal Journal, a publication of the Appraisal Institute, a global consortium of real estate appraisers, uses a simple, standardized formula for calculating the real estate value increase for the addition of solar electric power systems.


The formula calculates the value as a $20 increase for every $1 of annual electricity cost savings that is generated by solar.


Using the formula, a system that saves $1000 annually, increases the real estate value of the property by $20,000. A $10,000 annual savings increases the value by $200,000.


In another example, using the array pictured to the left in Southeastern NY, the annual electricity savings is about $1,250. At $20 for every $1 increase in annual electricity savings, the property value increase is about $25,000.


As I mentioned earlier, here's a couple more interesting real estate benefits you receive when you install a solar power system.


The first is that solar power systems don't increase the assessed value of commercial and residential real estate. That means that unlike most capital improvements, the tax man doesn't get to whack you with real estate tax assessments related to the solar system.


Your new pool, wood deck or most other major additions can't give you that.


This may change in the future, but …for now, it’s a tax free advantage.


The other benefit is that solar electric power systems are not subject to federal, state or local sales taxes.

Given that solar can cost tens of thousands and even millions of dollars before rebates and incentives, sales tax relief is currently another valuable benefit.


With increased residential and commercial real estate property values, tax assessment and sales tax relief, Federal and State rebates and credits, how can you ignore the financial benefits?


By: Rick Contrata





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