Q: We plan to install solar panels on the roof of our home in Nassau County, New York, even though we plan to move within five years. Several real estate agents advised us not to install the panels as they would hurt the resale value later. What is your advice on this?
A: Solar panels can be a valuable investment for a homeowner, with benefits that go beyond resale value. But not all homes reap these benefits, and you’ll need to do some research to determine if the considerable upfront costs are worth it. Once you figure that out, you can start thinking about resale value.
Expect to pay between $15,000 and $25,000 to buy and install a solar system for your roof, depending on the Center for Sustainable Energy. There are tax incentives to offset the considerable initial costs. The Inflation Reduction Act includes a tax credit covering 30% of the cost of purchasing and installing a solar system. Credit does not apply to leased systems. Consider state incentivesalso, as in New Yorkwhich offers a 25% tax credit, up to $5,000, for purchased or leased systems.
You should also consider how much solar panels will reduce your energy costs. Confirm that you can sell the excess electricity you generate back to the grid, otherwise it might not be worth it for you to do so. Then look at how much you spend on electricity over the year, a calculation that will vary depending on where you live, the size of your house and the number of people living there. An expert should assess your roof and your house, taking into account factors such as the orientation of the house, the age of your roof and the canopy cover.
“What you’re trying to figure out is how long it will take to justify that upfront cost,” said Kimberly Palmer, personal finance expert at NerdWallet, adding that on average, the return on investment for solar panels is six to nine years old.
Solar panels don’t add significant value to a home, but they don’t harm it either. Homeowners who sell their homes within five years of installing a system “recoup nearly 100% of their investment,” said Ben Hoen, a researcher at Lawrence Berkeley National Laboratory in California who studies the costs, benefits and market analysis of solar systems. He added that buyers are willing to pay a premium for homes with newer solar panels that is roughly equal to current market value. However, owners do not get this benefit for rented systems.
So if solar panels become significantly cheaper by the time you list your home, you might not break even on purchase and installation costs. However, you will have benefited from years of lower energy costs, which could compensate for this.
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