Do Solar Panels Increase Home Value? 2026 Complete Guide

Homeowners considering solar almost always ask the same question: "Will this help or hurt my home's resale value?" The answer is clear — owned solar panels increase home value in virtually every U.S. market studied. But the amount varies significantly by state, system size, and whether the panels are owned or leased.

This guide covers what the research actually shows, how much value you can expect to gain in your state, why leased solar is different, and how to maximize your return when selling a solar home.

What the Research Says: Solar Adds Real Estate Value

The most comprehensive study of solar home values was published by Lawrence Berkeley National Laboratory (LBNL) as part of their Tracking the Sun project. Analyzing more than 22,000 solar home sales across eight states, the study found:

Solar panels add approximately $4,000 per installed kW of capacity to home value.

For a typical 9 kW residential system, this translates to roughly $36,000 in added home value before accounting for system age and local market conditions.

A separate Zillow study found that homes with solar panels sold for 4.1% more than comparable non-solar homes on average. On a $400,000 home, that's $16,400 — not quite the LBNL per-watt figure, but still substantial.

The National Renewable Energy Laboratory (NREL) found that homes with solar systems sold for a premium in 100% of the markets studied across the United States. No market showed solar to be a net negative for home value.

Key finding: The value premium is roughly equal to the net installed cost of the system after the 30% federal ITC. In other words, solar is one of the few home improvements that returns close to 100% of its cost in added home value — on top of the utility savings you receive while living there.

Home Value Premium by State

The value solar adds to your home is influenced by your local electricity rates, solar awareness among buyers, and installer market maturity. States with high electricity rates see the largest premiums — buyers are willing to pay more for a home with lower operating costs.

State	Typical Premium per kW	9 kW System Premium
California	$5,000–$6,000/kW	$45,000–$54,000
Massachusetts	$4,500–$5,500/kW	$40,500–$49,500
New Jersey	$4,000–$5,000/kW	$36,000–$45,000
New York	$4,000–$4,800/kW	$36,000–$43,200
Connecticut	$4,500–$5,500/kW	$40,500–$49,500
Texas	$3,000–$4,000/kW	$27,000–$36,000
Florida	$3,000–$4,000/kW	$27,000–$36,000
Arizona	$3,000–$4,000/kW	$27,000–$36,000
Colorado	$3,500–$4,500/kW	$31,500–$40,500
National Average	$3,500–$4,500/kW	$31,500–$40,500

High-electricity-rate states consistently show larger premiums because buyers immediately understand the financial value of reduced electricity bills. In California, where PG&E/SCE/SDG&E rates reach $0.28–$0.45/kWh, a solar home saves $3,000–$5,000 per year in electricity — buyers will pay meaningfully more for that ongoing benefit.

For specific state incentives and solar economics in your area, see our complete state-by-state solar incentives guide.

The Critical Distinction: Owned vs. Leased Solar

The home value research above applies only to owned solar systems — those purchased outright with cash or a solar loan. Leased solar systems and Power Purchase Agreements (PPAs) are treated very differently by buyers and appraisers.

Owned Solar

• Value: Adds $3,500–$5,000 per kW to appraised home value
• ITC benefit: Original owner claimed the 30% federal tax credit
• Sale process: System transfers to buyer automatically with the home deed
• Buyer experience: Free electricity asset — easy to understand and value
• Appraiser treatment: Most certified residential appraisers in solar-mature markets are trained to value solar as an income-producing improvement

Leased Solar / PPA

• Value: Typically adds little to no appraised home value
• ITC benefit: Leasing company kept the 30% federal tax credit — not the seller
• Sale process: Buyer must qualify with the solar company and formally assume the lease
• Buyer experience: A 20–25 year financial obligation that many buyers resist
• Complication rate: Studies show leased solar can slow home sales and reduce buyer pool

If you're considering solar and plan to sell within 15 years, owning the system (via cash purchase or solar loan) is strongly recommended. See our solar lease vs. purchase decision guide for the full comparison.

Bottom line on leasing: A Solar lease is an obligation on the property, similar to a home equity loan. Buyers must formally assume it or you must pay it off at closing. Early payoff penalties can reach $15,000–$30,000 in the first 5–10 years of a 20-year lease. This doesn't mean leased solar is worthless, but it does mean you should factor this complication into your decision before signing a lease.

How Appraisers Value Solar Panels

Real estate appraisers have two primary methods for valuing solar:

1. Income Approach (Preferred for Residential Solar)

The appraiser estimates the annual electricity savings the system provides and capitalizes that income stream into a present value. Example:

• 9 kW system producing 11,000 kWh/year in New Jersey
• Local electricity rate: $0.16/kWh
• Annual savings: $1,760/year
• Capitalization rate: 5%
• Present value: $1,760 ÷ 0.05 = $35,200 added value

This approach produces values closely aligned with the LBNL research when local electricity rates and system production are accurately estimated.

2. Cost Approach (Common in Markets with Less Solar Experience)

The appraiser estimates the current cost to install an equivalent system, then adjusts for depreciation based on system age. For a 5-year-old system:

• Current cost to install a comparable system: $30,000
• Age depreciation: 5 years × 3% = 15%
• Depreciated value: $30,000 × 0.85 = $25,500 added value

The cost approach tends to produce lower valuations than the income approach and doesn't fully capture the value of long-term electricity savings. If your appraiser plans to use the cost approach, provide them with your annual utility bills and production reports to help them understand the income value.

What Appraisers Need From You

When selling, provide your appraiser with:

• System specifications: Installer invoice showing total installed cost, panel make/model/wattage, inverter type, installation date
• Production history: 12 months of monitoring data from the inverter app or utility bills showing solar production vs. consumption
• Warranty documentation: Remaining years on equipment and performance warranties
• Utility bills: Pre-solar vs. post-solar bills showing actual savings
• Applicable incentives: SREC registration, PBI enrollment documents if applicable

The more documentation you provide, the more accurately the appraiser can value your system using the income approach rather than defaulting to the less favorable cost approach.

Property Tax Exemptions: Keeping the Gain Tax-Free

One of solar's most overlooked benefits is the property tax exemption available in most states. When solar adds $30,000–$40,000 to your home's assessed value, that could mean an additional $450–$800 per year in property taxes — but most states prevent this reassessment.

States with full solar property tax exemptions include:

• California: Permanent exclusion under Revenue & Taxation Code §73 (tax savings worth $3,000–$6,000 over system life at ~1.1% rate)
• New Jersey: Full exemption on solar added value
• Massachusetts: 20-year exemption under M.G.L. c. 59, §5 Clause 45
• New York: RPTL §487 exemption (file Form RP-487 with county assessor)
• Texas: 100% exemption under Tax Code §11.27 (worth $10,000–$15,000 over system life at 1.6–2.5% TX rates)
• Florida: 100% property tax exemption (worth $10,000–$15,000 over system life)
• Colorado: C.R.S. §39-3-118.5 — full assessed value exclusion
• Virginia: Code §58.1-3661 — 100% property tax exclusion
• North Carolina: G.S. §105-277.3 — 80% property tax exclusion

Without the property tax exemption, added home value means added annual tax liability. With the exemption, you gain all the value without the ongoing cost. This is why the after-tax return on solar is often better than first-year calculations suggest.

For state-specific property tax exemption details, see the individual state solar incentives guides linked throughout this article.

Does Solar Speed Up or Slow Down Home Sales?

Research on solar and days-on-market is mixed, but points in a favorable direction for owned systems:

• Zillow research found solar homes sell for 4.1% more on average, with roughly similar time-on-market vs. non-solar comps
• LBNL research found solar homes in California sold faster than equivalent non-solar homes in years 2014–2018 as buyer awareness increased
• Leased solar homes consistently show longer days-on-market — buyers unfamiliar with solar leases are often reluctant to assume a 20-year payment obligation

The takeaway: Owned solar should not slow your sale and often helps it. In solar-mature markets (California, Massachusetts, New Jersey, Colorado, New York), buyers actively seek solar homes and understand the value. In less solar-saturated markets (Mississippi, Idaho, Montana), you may need to educate buyers on the value — provide clear documentation of electricity savings and system quality.

How to Maximize Solar Home Value Before Selling

If you have solar panels and plan to sell, these steps maximize the value buyers and appraisers assign:

1. Get a Full Production Report

Download 12 months of production data from your inverter app (Enphase Enlighten, SolarEdge mySolarEdge, Tesla app). This shows actual kWh generated and lets the appraiser calculate income-based value. Without this, appraisers use conservative estimates that typically undervalue the system.

2. Gather All System Documentation

Compile your original installer invoice (showing total cost), warranty documents (equipment and performance), utility interconnection agreement, and any applicable incentive enrollment documents (SREC registration, PBI contract). Create a single folder — digital or physical — to hand to your real estate agent.

3. Understand Your Net System Cost

Calculate the system's net cost: total installed price minus the 30% ITC received. This is the baseline value against which the income approach should be checked. If the appraiser's income-approach valuation is significantly lower than net installed cost, provide the income calculation with actual local electricity rate data.

4. Check for Active Incentive Program Value

If your system is enrolled in an active incentive program — NJ SREC II, MA SMART, IL Shines, CT RSIP, MD SREC, MN Solar*Rewards — document the remaining program term and income value. A 9 kW system with 10 years remaining on a MA SMART contract worth $0.18/kWh produces approximately $18,000 in future income. This income stream adds to home value and should be explicitly highlighted to buyers and appraisers.

For SREC market value details, see our SREC guide.

5. Disclose Accurately in the MLS Listing

Many states require solar disclosure in real estate listings. Even where not required, listing the system's key specs (9 kW, installed 2023, 25-year warranty) and documenting monthly savings ($180/month average) helps buyers understand the value before viewing the home.

6. Request a Solar-Experienced Appraiser

Ask your real estate agent to request an appraiser with solar home experience, particularly in markets where solar is still uncommon. Fannie Mae's guidelines now require appraisers to consider solar in their valuations, but appraiser experience varies widely. An experienced solar appraiser will use the income approach; an inexperienced one may default to the less favorable cost approach or exclude solar value entirely.

Does Age Affect Solar Home Value?

Yes — older systems carry less value than newer systems, primarily due to remaining warranty life and expected remaining production years. General rules:

• 0–5 years old: Full market value premium applies (system at or near peak output, full warranty life)
• 5–15 years old: Moderate depreciation based on performance data and remaining warranty (value falls 1–2% per year)
• 15–25 years old: Significant depreciation; value primarily from remaining production and reduced operating costs rather than full system replacement cost

For a well-maintained system, performance data is the best evidence of value. A 15-year-old system still operating at 95% of original output (common for premium panels like SunPower or REC) retains much more value than a budget system showing 85% production.

See our solar panel lifespan and degradation guide for detailed information on degradation rates by panel tier.

Solar and Home Value: Lender Considerations

Conventional mortgages (Fannie Mae/Freddie Mac) have specific solar guidelines:

• Owned solar (title transfer): System is part of the property; appraised value flows into the loan-to-value calculation normally
• Solar loan: Treated as a mortgage-like debt obligation; lenders consider it in debt-to-income ratios
• PACE financing: This is a property tax lien — it has "super lien" priority in many states. FHA and VA loans CANNOT be used on homes with PACE financing; conventional loans can in most states with some additional documentation

If your buyer is using FHA or VA financing, verify that your system is owned outright or financed with a regular solar loan before listing. PACE-financed systems complicate FHA/VA sales.

The Bottom Line: Solar Is a Strong Home Investment

The research is consistent: owned solar panels increase home value by approximately $3,500–$5,000 per kW in most U.S. markets, with high-rate states (California, Massachusetts, Connecticut, New Jersey, New York) showing premiums at the higher end of this range.

The financial summary:

• A 9 kW system adds $31,500–$45,000 to your home's market value (income approach)
• The 30% federal ITC reduces the effective cost to $17,000–$22,000 for a typical 9 kW system
• The net result: added home value typically exceeds the net-of-ITC system cost, giving you positive equity from day one
• Annual electricity savings of $1,500–$3,000/year accrue for the entire time you own the home
• Property tax exemptions in most states prevent the added value from increasing your annual tax bill

If you're still deciding whether solar makes financial sense, use our solar payback period calculator and solar ROI by state comparison for data on your specific state. To get started with system sizing, try our Solar System Designer tool.

For state-specific solar incentives and the full cost breakdown in your area, see our complete state solar incentives guides covering all 50 states.

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Frequently Asked Questions

Does solar increase property taxes? In most states, no — solar additions are exempt from property tax reassessment under state solar property tax exemptions. California, Texas, Florida, New Jersey, New York, Massachusetts, Colorado, Virginia, and North Carolina all have exemptions. In states without exemptions (Louisiana, Tennessee, Idaho), the added value may increase your property tax bill — check with your county assessor.

How much does a 6 kW solar system add to home value? Based on LBNL research at $3,500–$5,000/kW, a 6 kW system adds approximately $21,000–$30,000 to home value, depending on location and local electricity rates.

Should I install solar before selling my house? It depends on your timeline. If you have less than 12 months before selling, the solar installation process (permitting, installation, interconnection) can take 3–6 months, and buyers may not fully credit a brand-new system vs. an established one with production history. If you're 2–5 years from selling, installing now captures years of electricity savings while building the production history that supports higher appraisal values.

Can I take the ITC if I plan to sell the house? Yes — you claim the 30% ITC in the tax year the system is placed in service (receives Permission to Operate), regardless of when you sell. There is no ITC recapture for selling a solar home (unlike commercial ITC). The only exception: if you rent the home rather than live in it for part of the year, there are use-percentage calculations that may reduce the credit.