FAQ: Does Going Solar Increase My Property Taxes?
by Cody McGowan, on Jul 17, 2020 11:04:00 AM
Find Out If More Property Taxes Will Be Added to Your Solar System Cost
You want to save energy and money – not pay more taxes! However, it’s a big concern when homeowners remodel, renovate, or add on to their homes. Will the boost in your home’s value increase your property taxes? Property assessors are always on the lookout for opportunities to bring in more revenue from home improvements.
Converting a spare room to a home theater is not something an inspector will notice, but you can’t hide a new solar panel system. Fortunately, you don’t have to worry about taxes being added to your solar system cost. In most cases, homeowners in Decatur, IL, that install a solar energy system will not see a property tax increase. Find out why by reading our blog.
A Green, Tax-Free Home Renovation
Switching to solar increases your property’s value, but not your property taxes. It seems odd because nearly all home improvements result in higher taxes. So, why are solar panels different? It’s because they are green energy additions to your home, and the State of Illinois looks favorably on green energy.
According to Article 10, Division 1 of the Illinois Tax Code, “It is the policy of this State (Illinois) that the use of solar energy systems should be encouraged because they conserve nonrenewable resources, reduce pollution and promote the health and well-being of the people of this State.”
The State wants to make it more economically feasible for you to install a solar system. So, even when your home’s value is increased by solar panel installation, the State will not tax you for it.
How Much Do You Save?
First, it depends on the cost of your system. Let’s say your new solar energy system costs $20,000. If the State charged you for the increased value of your property, your taxes would go up by $350 or more. In 25 years, the cost would amount to $8,750. That’s a lot of money you’re saving! But it gets even better. Since you own a new solar panel system, the US government allows you to deduct 26% of the cost of the system from your taxes. It’s called the ITC credit. In addition, you’ll save more money through a process called net metering. Through net metering, the utility company pays you for the solar power you produce, which means you save money every month while saving energy.
Occasionally, some individual jurisdictions have separate assessments. So, it’s important to consult a tax attorney or accountant ahead of time. Usually, there is no additional property tax. Even though Illinois offers a special assessment for solar panel systems, you may need to register with a county assessment officer or contact your local assessor to see if there will be property tax changes.
Do you have questions about solar system costs and the financial benefits of installing a one? Call Summit Solar at 888-884-3557 or complete our online contact form.