The best reason to aspire to own a home is the knowledge that your landlord generates revenue in their sleep. When you rent an apartment or property, you pay rent to a landlord. It is the landlord or the property owner hired by the landlord, who collects your hard-earned money to pay their own bills. Meanwhile, while you are paying for your landlord bills or the bills of the original property owners and investors, you still have to pay your own bills. And the longer that you defer your dream of homeownership, the longer you will pay your landlord’s bills while struggling to save money. You should aspire to own your own home and increase its property value. And one to increase the value of your home is to install solar panels. Solar panels increase home value.
Solar Panels Increase Home Value (The Basics)
The energy needs of the future will be met by renewable forms of energy like solar energy. And the fossil fuel industry as we know it will be obsolete within a century or so. By some industry estimates, the world will run out of oil, coal, and natural gas by the year 2060.
So, why should that matter to you as an aspiring homeowner?
Well, you can take advantage of local, state, and federal rebates for installing solar panels on your property depending on where you live. These rebates are called the Solar Investment Tax Credit. You will probably need to get a smart meter for this.
The federal government wants homeowners like you to get ready for the future energy infrastructure changeover to renewable energy.
However, you only have a limited time to take advantage of the ITC. And the sooner that you install solar panels, the sooner you can have solar panels increase home value.
Before we discuss how solar panels increase home value, it’s important to discuss the traditional assessments of home value.
Traditional Home Values
Homeownership is one of the starting points required for financial independence. You should aspire to pay off all your debts, save money, make prudent investments, and own property, like a home.
Owning a home may be the greatest first investment that you ever make. However, an investment like a property must be upgraded and maintained regularly to increase and maintain its value.
The median cost of a home in February 2021 is $355,000 according to government estimates. However, according to Zillow, the typical homeowner pays $266,000 to buy a new home.
The average rent for a one-bedroom apartment is $1,000. So, you can buy a home for $266,000 and own it yourself. Or you can pay a landlord $1,000 in monthly rent for 22 years, which is the same equivalent as buying a home with a value of $266,000.
Instead of spending 22 years, about 1/5th of a century, paying $1,000 monthly to your landlord, and paying them the equivalent of a new home, aspire to own your new home.
And one way to increase the value of your home is to install solar panels. Solar panels increase home value.
What Are Solar Panels?
Solar panels are also known as photovoltaic cells. And solar panels are light-absorbing screens that convert the energy emitted by the sun, also known as photons, into electricity.
Silicon, a component inherently found in sand, creates electricity when exposed to solar energy, or photons.
The conceptualization of solar panel energy first began in the late 19th century as a way to convert solar energy into steam energy to propel the machinery of the era. Needless to say, the technology behind solar panels has evolved significantly since then.
When solar energy is collected in a solar panel, it is then transferred through an inverter mechanism. After solar energy is passed through an inverter, the energy is then converted into AC current.
The electricity created by your solar panels can then be used in your home. Or you can save energy in a battery system. You can also relay the energy you create to the local energy grid in a rebate system you prearrange with your local electrical utility company.
Now that you understand the basics concerning solar energy, how do solar panels increase home value?
How Do Solar Panels Increase Home Value?
Installing a solar panel array in your home is seen as an upgrade to potential home buyers. In the same way that you may renovate a kitchen, paint your exterior, or replace your roof, installing a solar panel system is viewed as a value-enhancing upgrade.
According to the Office of Energy Efficiency and Renewable Energy, a home with a solar panel system installed can see its value increase by over $15,000.
As a homeowner, you can save over $500 a year on electricity costs.
And solar panel installations on residential properties do not require a lot of maintenance. Depending on the size and complexity of your solar panel installation, it might cost you anywhere between $150 to $330 annually to maintain your solar panel system.
And depending on the size and cost of your home, it may cost anywhere between $16,000 to $20,000 to install a solar power system.
However, it would help if you outright own the solar panel system you install on your property. If you lease a residential solar panel system through a third party or purchase one via a loan you haven’t paid off yet, then a potential home buyer won’t view a solar panel installation as a home value upgrade.
After all, a potential homeowner wants to buy into a solar panel home installation home value upgrade that you own, not buy into the residential solar panel system you lease or loan.
And another great incentive to invest in a residential solar panel system is the solar investment tax credits.
Solar Investment Tax Credits
Every local and state government, as well as the federal government, has a refund and/or rebate incentive for you to install a solar panel system on your property. These are solar-centric tax credits and it’s essentially free money.
In 2019, you could get a 30% refund and/or rebate against your solar panel installation costs. Unfortunately, those solar-centric tax incentives have fallen to 22% for this year. And they won’t exist by 2022, so 2021 is the final year for you to take advantage of these incentives.
Refer to your local, state, and federal government websites for solar energy for more information on ITCs.
Increase Your Home Value Now
Solar panels increase home value. That fact cannot be denied.
However, you must ask yourself if solar panels will add home value relative to your personal circumstance and region of residence.
And if you don’t take advantage of solar ITCs this year, you won’t get a refund or rebate against your installation costs.
Make sure you consider every contingency relative to your needs before installing solar panels in your home.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.
