CNBC shared that installing solar panels is quickly becoming popular in the United States. As more Americans become aware of sustainable houses and their environmental benefits, more people are choosing to make the switch. Moreover, the US government has required all new homes in California to use solar panels starting in 2020. With this, most houses in California are now fully equipped with solar panels. Although not everyone is on board with solar panels just yet, having them in your home has financial benefits that may encourage you to install them.
Here are some of the reasons why solar panels increase your property’s value:
Demand for Sustainable Houses
In our post on ‘Resale Value Factors to Consider Before Buying a Home’, we explained that most home buyers today evaluate the property’s eco-friendliness. Although this is a relatively new trend, homeowners value sustainable home upgrades because of their environmental benefits. CNBC further reported that the increasing demand for sustainable houses pushed up the prices of homes with solar panels. They found that more than 80% of buyers prefer properties with energy-efficient features when selecting their new home.
As a result, homes with solar installations sell for about 4.1% or $9,274 more than an average US home without these upgrades. In major city-states like New Jersey, the prices of houses with solar panels can even sell for 9.9% or $32,281 more. This shows that trends in real estate significantly affect the value of homes with or without solar panels.
Lowers Electricity Bills
When asked why homeowners prefer sustainable houses, CNBC revealed that savings and having control of the monthly utility expenses are their main reasons for switching to solar. Their claims are not unfounded since solar panels will reduce your electricity bills confirmed that having solar panels will reduce your electricity bills. With this, you can achieve energy independence from service providers and control the amount of electricity you use at home.
Environmental journalist Jess Taylor also explained that installing solar panels increases your property’s value. This is because each additional $1 in energy bill savings from using your solar power system adds $20 to your home’s total value. Overall, this means you can save up to $400 per year and add a value of $8,000 to your home. Another study also supports the use of solar power since it can increase the resale value of a property by up to $5,911 per kilowatt.
Allows You to Earn Tax Credits
Lastly, having solar panels in your home allows you to earn government tax credits. According to CNET, homeowners who use solar panels can receive solar investment tax credits (ITC), which allows them to deduct up to 26% of the cost of installing solar panels from their federal taxes. This means ITC covers the cost of solar panels, labor for the installation process, and additional equipment including wiring and energy storage devices like solar batteries. With this, you can increase the value of your property since they are popular today without having to solely pay for all the necessary expenses.
However, ITC will not apply if you lease your solar panels. You must directly buy or loan them to be eligible for the tax exemption. Lastly, you must file the necessary documents, such as the IRS Form 5695, as part of your federal tax return to avail of the credit.
To summarize, solar panels provide financial benefits for homeowners. From lower monthly electricity bills and tax breaks for panel installations, you can offset your expenses on purchasing solar panels and expect a significant increase in the value and demand for your home.