Solar Panels for Rental Property - Solar by CIR

Solar Panels for Rental Property

As solar energy costs continue to decrease and more incentives become available, installing solar panels offers upfront cost savings and significant long-term ROI. Whether you are a residential landlord or manage commercial properties, solar panel installation on your investment properties benefits your bottom line.

The Benefits of Solar Panels on Your Rental Property

Increase Property Value

State and Federal Tax Credits

Installation

LEED Certification

Depreciation Expense

The Benefits of Solar Panels on Your Rental Property

There are plenty of reasons why installing solar panels for your investment property is a smart choice. Let’s take a look at just a few reasons.

Increase Property Value

While it may take a few years to recoup the cost of installing solar panels on investment properties, both the perceived and actual value of the property increases right away. As more commercial and residential tenants seek out clean sources of energy to power their homes and businesses, property owners who’ve built solar into their infrastructure can expect more profitable rents and sustained higher occupancy.

State and Federal Tax Credits

Federal tax credits are available for investment properties. You can take advantage of a federal tax credit equal to 30% of what you paid for solar for the next 10 years.

New York State offers a tax credit for installations of solar panels on commercial and rental properties, providing 25% up to $5,000. While NYS does require the property to be a primary residence, the incentive is still available for owner-occupied two-unit rental properties. The incentive is not available for any non-owner-occupied two-units.

NYSERDA also offers an incentive of $0.20 per watt for solar installations.

LEED Certification

For additional value, solar panel installation can also aid in becoming LEED certified. LEED Certification is the gold star standard that demonstrates your commitment to sustainable building and energy practices.

Depreciation Expense

A high-quality solar system comes with a warranty period of up to 20 to 25 years, and commercial solar installations can be depreciated over 5 years, during which time you can claim a 10% decline in your solar system’s value each year through the depreciation value method. For example, if you invested $6,000 in a new solar system, you could claim $600 in the first year, $540 during the second year, and so on.  This helps offset tax payable on the extra rent income you’re able to charge for installing solar on your property. You’re also left with an extra five years of savings, which are pure profit.

Solar Panel Financing

We advise investment property owners to consult with a tax professional to ensure that any incentives may be recaptured. NYSERDA (New York State’s Research and Development Authority) under the umbrella of NY-Sun have designed a system of incentives to subsidize the cost of installation, making the prospect of going solar more attractive to landlords.

Project incentives will vary by region and current incentive rate. Incentive rates decrease as projects capacity increases. As current capacity stands, projects under the 750 kW cap may fall under the Small Commercial and Non-residential structure subject to $0.35/watt installed. For commercial industrial projects over 200 kW, there is either a Performance Based Incentive (PBI) Monetary or Volumetric crediting method.

Currently, Commercial & Industrial (C&I) incentive stands at $0.12/watt up to 7.5MW. Qualifying solar energy equipment is eligible for a cost recovery period of five years.

“Depreciation” is the loss of value that occurs over time when the object purchased is used for a specific use. As a business owner, you are eligible to deduct this “loss in value” from your taxable income when used for your investment property. If you are running a profitable venture, and you can show that the solar power you are generating is for investment property use (as opposed to personal use), then it may have a strong impact on reducing your bottom line.

For more information, check out our Solar Panel Cost page.

Want to know how much solar will cost for you? 

Is Solar Right For Your Investment Property?

Solar costs continue to decrease, so converting rental properties to solar energy is becoming a viable option for investment property owners. Not only are there environmental advantages, there are also positive financial incentives that make solar a smart choice to power your investment. And as solar technology becomes even more efficient, we can expect installation costs to continue dropping while our savings grow even higher.

Solar Panels for Rental Property FAQs

  • Can I Put Solar Panels on My Apartment?

    If you rent your apartment, your landlord’s permission will be needed in order to move forward with any type of solar project on the property they own. This handy info sheet can help answer your landlord’s questions about installing solar panels on your apartment building.

    If you are unable to get permission from the landlord, you may also consider opting into a nearby Community Solar array if you are responsible for paying for your electricity.

  • Does New York State Offer a Tax Credit for Solar Installation on Rental Properties?

    Yes, New York State offers a tax credit on solar and rental properties of 25% up to $5,000. While New York State does require the property to be a primary residence, the tax credit is still available for owner-occupied two-unit properties.

  • My Property is a Non-Owner Occupied Two-Unit. Can I Still Qualify for the New York State Tax Credit?

    No, the New York State solar tax credit is only available for commercial and rental properties that are a primary residence, or an owner-occupied two-unit.

  • What Kinds of Federal Incentives Are Available?

    Federal tax credits are available for solar installations on investment properties. You can take advantage of a federal tax credit equal to 30% of what you paid for solar for the next 10 years.

  • How Long Can Solar Installations Be Depreciated?

    Commercial solar installations can be depreciated over 5 years, during which time you can claim a 10% decline in your solar system’s value each year through the depreciation value method. For example, if you invested $6,000 in a new solar system, you could claim $600 in the first year, $540 during the second year, and so on.

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