The Pitfalls of Leasing Solar
Among the dozens of solar install companies that have popped up throughout Las Vegas in the past few years, we have noticed a trend of trying to convince homeowners to lease solar equipment rather than buy it outright. These sales pitches primarily talk about how much lower the upfront cost of installing solar is when leasing and why this “makes sense” for you and your family. While leasing your solar system does lower your initial cost, the long-term financial strain and restrictions involved undo most of the short-term benefits. In addition to tying customers down to long-term contracts (20 years, regularly), leasing imposes a number of financial, logistical, and legal roadblocks:
- Over the course of two decades, the monthly/annual payments required to lease your solar equipment will almost always exceed the cost of purchasing your system, typically by (at least) several thousand dollars.
- Solar lease contracts are often difficult to transfer should you choose to sell your home before the solar system has been completely paid-off. Anyone looking to buy your home must have a credit score high enough to allow them to take over the lease. If they don’t, you will have to pay the remainder of the lease before selling your home.
- Purchased solar systems also automatically factor into the resale value of your home, and homes outfitted with solar sell, on average, at a $15,000 higher premium than homes without it.
- The Federal Solar Tax Rebate allows a 30% tax credit on the cost of installing any new solar system, with no maximum. However, only individuals/companies who purchase solar equipment are eligible for the tax credit. This means that the company leasing your system to you can deduct 30% from their equipment costs, but you can’t! While it would be nice for solar companies to pass on these savings to their customers, this rarely happens.
Before you lock yourself into a long-term solar energy contract, remember to check the terms of your lease for these potential issues. Make sure you are finding the most reliable, efficient, and cost-effective solution to your energy needs, and don’t expect to be able to figure all of this out with one glance at the terms of your lease. These contracts are designed to be complex, so do not hesitate to seek help or consult more resources before signing. Call us at (702) 688-7940 for more information about converting to solar and setting off on the path to energy independence.
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