Whether you’re planning on selling or buying a home with a pre-installed rooftop solar system, there are a couple of intricacies to know before you take specific steps. The short answer to this question is that - yes, installing a solar system drives up your home's value. 

However, not all solar systems are the same and there are stark differences between them depending on various factors. In this article, we’ll explain the reasoning behind solar systems increasing a home’s value and everything else you should know before going down this route. 

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How Much Does a Rooftop Solar System Increase Home Value?

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Virtually anything you install in your home that expands its functionality and uses, as well as investing in better aesthetics, can increase the home’s value, but solar systems are arguably the most significant contributors. 

Zillow and the Lawrence Berkeley National Laboratory conducted a couple of studies on this topic, showcasing how effective solar systems are at increasing home value. Zillow’s study in particular tells us that homes with solar systems installed sell for 4.1% more on average than those without. 

Certain locations see more home sales (NYC at 5.4%) while others see less (Riverside, CA at 2.7%). Lawrence Berkeley’s study has shown that each kilowatt of solar power generated by a home increases its value by around $6k. 

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Here are a couple of examples and averages:

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• 4kW Solar System - ~$24,000 home value increase
• 8kW Solar System - ~$47,000 home value increase
• 12kW Solar System - ~$72,000 home value increase, and so on.

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The great news about this is that the value increase for each kilowatt of solar power equates to the amount you’d pay for buying the same number of solar panels. In essence, you’ll only lose a marginal amount of money and may even profit from selling a home with a solar system installed if the need for such homes increases. 

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What Solar System Factors Increase Home Value?

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Although the numbers and percentages we mentioned in the previous section of this article are accurate, they can still be different depending on a couple of important factors. You should always consider these factors before installing a solar system on your rooftop. 

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Location

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Your geographic location is the most important contributing factor to how much value a solar system will add to your home. For starters, depending on where you live, you may get less or more sunlight than people in other locations. This can influence the efficiency of solar systems, which further impacts the home value gain. 

Secondly, each ‘geographic’ community has its own unique electrical costs. As an example, homeowners in California pay, on average, around 20% more for electricity than the national average. 

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Local Solar System Installation Prices

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In a hypothetical situation where you choose to install a solar system for your home in a location where solar system installation prices are high, potential buyers will always choose to purchase your home to save some money. 

The same is true for the opposite situation; if installing solar panels is cheap, you won’t gain as much in home value, and other homeowners will seek to install them instead of spending money on a new home with them pre-installed. 

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Solar System Energy Output

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This is a simple one - the more powerful your solar system is, the higher the increase in home value. Refer to the examples of home value increases we presented above. 

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Solar System Age

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The age of your solar system can greatly reduce your home value gain, especially if it’s older than 10 years. The depreciation needs to be taken into account, as well as any potential repairs the home buyer will have to do. 

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Solar System Replacement Costs

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As solar systems age, they often need repairs and part replacement. They are generally long-lasting, but the usual wear-and-tear can cause damage that needs fixing. If the system is old, its replacement parts expensive, and repair work tedious and costly - home value gain will be minimal. 

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Are Solar Panels a Good Choice for your Home?

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Considering the increase in electricity prices worldwide and the burning question of climate change, many homeowners are seeking energy generation of their own accord. Solar panels are efficient, climate-friendly energy generation solutions capable of powering an entire home by themselves. 

If that’s not your goal but just a simple reduction in electricity bills, then installing a solar system is still an excellent choice. Overall, solar panels will benefit homeowners greatly regardless of whether or not they choose to sell their homes in the future. 

Let’s look at the following few metrics to determine if a solar system is a feasible choice for you.

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High Utility Bills

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The cost of electricity has risen recently and homeowners who use a lot of it are now having trouble keeping up with the rising costs. On top of that, specific locations in the US have tremendously high electricity bills which lower housing demand by quite a lot. 

Solar panel power generation can drastically reduce electricity costs and you’ll also enjoy a certain dose of autonomy. So, if you live in a location that sees high utility bills, installing a solar system could be the best choice you could make, considering it’ll add more value to your home and let you keep more of your money by paying less in bills. 

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Sunlight Frequency

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Some locations don’t see a lot of sunlight due to their geographical position or average yearly cloud cover. However, states like Florida get a lot of sunshine throughout the year, providing homeowners with the best conditions to make solar panel installation worth it. 

Another crucial piece of information regarding sunlight is the position and angle of your roof. It needs to face East-West for optimal power generation. The angle isn’t as impactful as the overall position of your home, but it’s still better to have a perfectly angled roof for maximum solar panel power generation. 

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Government Incentives

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Many governments worldwide have begun incentivizing homeowners to purchase solar panels and begin independent energy generation. These incentives include solar system cost reductions, free purchasing credit, and lower taxes. 

As for the US, state governments have different stances on the issue of property tax following solar system installation. In most of these states, you are exempt from an increase in property tax, even if a newly-installed solar system boosts your home’s value. 

Here’s the basic rundown (keep in mind that this might change in the near future):

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Local Exemptions - Alaska, Hawaii, New Hampshire, Ohio, and Virginia

100% Exemption (’Forever’) - Arizona, Colorado, Connecticut, DoC (District of Columbia), Florida, Indiana, Kansas, Louisiana, Maryland, Michigan, Minnesota, Missouri, New Jersey, New Mexico, Oregon, Rhode Island, Texas, Vermont, and Wisconsin

100% Exemption (20 years) - Massachusetts

100% Exemption (10 years) - Montana

100% Exemption (5 years) - Iowa, New York, and North Dakota

100% Exemption (until 2025) - California

80% Exemption - North Carolina

Specific system-based exemption - Illinois, Nebraska, and Tennessee

70% exemption of total property value or $50,000 - South Dakota

No tax exemption - Alabama, Arkansas, Delaware, Georgia, Idaho, Kentucky, Maine, Mississippi, Nevada, Oklahoma, Pennsylvania, South Carolina, Utah, Washington, West Virginia, and Wyoming

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These incentives are tax-based, so they aren’t the only ones you can benefit from. Check with your local government to see the benefits (if any) you can receive from installing a solar system for your home. 

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Should you Install a Solar System in your Home if you Plan on Moving?

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Absolutely! Even if your home is older and you plan on moving out in a few years, such an investment can only bring you benefits in the long run. For one, the value of your home will be higher, and you may attract even more potential buyers. 

The housing market has changed in recent years and many potential buyers are looking to purchase homes with pre-installed solar systems. This dose of power independence lowers taxes, lets you generate enough electricity for crucial systems and helps the planet since it causes almost zero pollution. 

If your financial status is right and the conditions for installing a solar system on your roof are met, you should opt for one. Not only will you help yourself with extra power (the less of which you’ll need from utility services), but you’ll also save money due to lowered taxes. 

All of this makes installing a solar system in your home a great choice, even if you plan on selling said home soon.

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Conclusion

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A rooftop solar system is becoming all the rage in the United States due to various government incentives, lowered taxes, and increased home value. Solar power is green power so the more we outfit our homes with solar panels, the more we’re helping the planet and fighting climate change. 

The increase in home value is enough to push homeowners to install a solar system but it shouldn’t be the only benefit you see. In any case, if you’ve been debating whether or not to get one - let this article be an example of just how profitable and effective solar systems are. 

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