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Solar panels are an increasingly popular way to lower energy bills on properties nationwide.
For some homes, solar panels can effectively reduce the cost of energy bills to nothing. This may sound like a great deal, but it only ends up being one if the cost of installing and maintaining solar panels is less than the amount of money saved in the long run.
If you live in New York and are considering adding solar panels to your home, here’s what you should know about the costs and the value your home will receive.
Installation Costs
The average total cost of putting in solar panels is typically between $15,000 and $30,000. The exact amount depends on several factors, including:
- The specific product you purchase
- How many panels you install, and how big they are
- Whether your setup requires extra wiring or property adjustments
- What type of discounts or incentives are available
The last point is particularly significant in New York, as the state is very supportive of solar power and offers plenty of financial incentives to set it up.
Furthermore, it’s worth remembering that almost every dollar you spend installing solar panels will increase the value of your home by an equal or greater amount. Thus, if you intend to sell your home at some point, the installation may effectively be free.
Incentives and Rebates
If you install solar panels in New York, you should be eligible for several rebates or incentives. The following are some of the most valuable.
Federal Solar Tax Credit
You can claim a tax credit of 30% of the cost of the installed panels on your federal income tax. There’s no limit to how much you can get from this benefit, which means all solar panel installations are effectively 30% cheaper.
New York State Tax Credit
Similarly, you can claim a credit on New York taxes equal to 25% of the installation cost. This credit has a limit of $5,000, though that only matters for more expensive systems. For any system that costs $20,000 or less, you’re effectively only paying 45% of the cost.
Sales Tax Exemption
Solar panels and installation are exempt from sales tax, and this exemption can amount to quite a bit, depending on the product you go with. If your solar panels cost $25,000, the 4% you aren’t spending adds up to $1,000 in savings.
Property Tax Exemption
The more important exemption is the property tax exemption. This exemption prevents your property value from increasing based on the installation of solar panels for 15 years after the installation.
The average property tax rate in New York is approximately 1.7%. This means that if your solar panels increase your property value by $30,000, you’ll save close to $8,000 over those 15 years.
Are solar panels worth installing?
Setting aside the environmental benefits, New York offers a significant financial incentive to install solar panels. But is this incentive enough? Only you can do the math.
Does your electric bill average $75 a month? If so, you’re spending approximately $1,200 a year on electricity. You would recoup the cost of a $20,000 system (out-of-pocket cost: $9,000) in a little under eight years. And the higher your average electric bill, the more benefit you get from installing solar panels.
Determining Whether Solar Panels Are Worth the Money
These types of calculations can be daunting, especially if you don’t know all the tax implications. If you’re considering installing solar panels in Staten Island, the real estate attorneys at Merlino & Gonzalez can help you determine whether doing so makes financial sense. Get in touch with us today.