With ample sunshine, numerous financial incentives, tax breaks, and other financial benefits, there has never been a better time for New Mexico residents to go solar. Ready to start reaping the benefits of your own solar system? Read on to learn why installing a residential solar system in your home is a smart investment.
Homeowners who install a solar power system can take advantage of lower utility bills, tax incentives, tax credits, and property tax exemptions. These financial benefits make installing a solar power system in your home not only more affordable but also a great investment.
New Mexico is lucky enough to have multiple tax credits: 1) a gross receipts tax exemption on your entire solar project, and 2) a 10% State Tax Credit towards the purchase of a solar system (see the bill here). Combined with the federal tax credit that saves you 26% on solar installation costs (ending soon), most New Mexico residents can benefit from a 43% credit.
It’s important to note that tax credits are not immediate savings when you pay for your new system. This tax credit may be spread across multiple years if necessary. Additionally, there are certain requirements that must be met to qualify for the credits.
To ensure that your new solar system will qualify for the tax credit, make sure it meets your local building code requirements and that the model you choose is certified by the Solar Rating and Certification Corporation. Solar Pro can guide you through meeting these requirements.
In addition to credits on the installation of your solar power system, property owners can also receive a 100% property tax exemption on solar panel systems. Home improvement projects like a solar power system typically increase the value of a home and this value typically results in an increase in property taxes. However, by taking advantage of the 100% property tax exemption, you can enjoy the benefits of your solar system without an increase in property taxes.
The state also makes solar companies exempt from paying the gross receipts tax that businesses usually pay for their product. This means that solar panels are cheaper to buy in New Mexico than in many other states.
Maximize Your Benefits by Purchasing Rather Than Leasing
You can maximize the benefits of a solar system by choosing to purchase the system rather than leasing or entering into another type of third-party arrangement. Since tax credits only apply to the owner of the solar system, those who choose to lease their system cannot benefit from these financial incentives. By purchasing your system, most homeowners can reduce their electricity bill by 70% to 100% while leasers can pay monthly lease fees for many years. Additionally, many leases can further reduce savings with contracts that increase payments each year.
Homeowners should be aware, that if you sell your home with a leased solar system, your new buyer must qualify to take over the lease. This is shown to complicate the buying process and disqualify many potential buyers.
While it has been shown that solar panel systems add value to your home, when it is time to sell, the benefits do not necessarily extend to those who lease. Under FHA and Fannie Mae loans, the value that solar panels add can only be included in the appraised value of a home when the panels are owned.
Owning your own system will typically save you more money on utility bills in the long run, as compared to installing your system under a lease. That is likely why homes with a solar panel system are more attractive to buyers. A study performed by the National Renewable Energy Laboratory (NREL) concluded that homes with a solar power system not only sell faster (an estimate 20% faster) but also sell for a higher price than similar homes without solar panels. However, homes with solar panels under a lease agreement may be less attractive to homebuyers who may be reluctant to assume the lease.