States Dangle Property Tax Abatements in 2015
By Mark Del Franco, Solar Industry Magazine
Several states are using property tax abatement programs to sweeten the deal for businesses and homeowners installing solar projects. In fact, 38 states currently offer some type of program aimed at property tax exemption for renewable energy.
According to the Solar Energy Industries Association (SEIA), an exemption typically excludes the added value created by the solar system to property valuations. In fact, the exemption makes it economically feasible for many. Homeowners, as an example, would not choose to install solar if faced with a property tax reassessment necessitated by the installation, notes the association.
“Markets are created when there are strong policies in place that encourage the use of solar energy, such as property tax exemptions,” says Ken Johnson, SEIA spokesperson. “When people choose to go solar, property tax exemptions prevent homeowners from being penalized with increased taxes.”
Such tax abatement programs come in many forms. For example, New Jersey exempts solar systems from local property taxes if the system is used to meet on-site electricity, heating, cooling or general energy needs. One tax exemption in Nevada allows businesses to apply for a property tax abatement of up to 55 percent – for up to 20 years – if solar power is generated on the property.
Given how the tax abatement programs can catalyze installations, some states, such as California, have extended existing programs. For example, in June, Gov. Jerry Brown signed legislation to extend the Solar Property Tax Exclusion until Jan. 1, 2025. As noted by SEIA, the extension of the exclusion does not take funs away from any jurisdictions where taxes are currently being collected, nor does it have an impact on California’s general fund. Further, the exclusion reduces wholesale solar electricity costs for utility customers while, at the same time, reducing barriers to accessing solar for customer-sited projects.
That same month, the New York legislature approved a measure to extend a state property tax abatement program for renewable energy systems, including solar, wind and other energy systems until Jan. 1, 2025. The bill carries a 15-year property tax exemption for homeowners and residences installing qualified renewable energy systems. However, local governments are permitted to disallow the exemption in their jurisdictions.
The legislation comes at a time when New York’s solar industry is thriving, explains Samuel Scroggins, an associate at the law firm Foley & Lardner. In fact, the state installed nearly 69 MW of solar capacity in 2013 – ranking ninth among U.S. states.
If signed by Gov. Andrew Cuomo, D-N.Y., the bill will have a positive effect on New York’s residential solar market, explains Scroggins.
“Specifically, the bill will help mitigate the costs of installing solar electric generating systems on residential property,” he says. “Further, by strengthening the existing incentive program, New York will continue to make strides and bolster its reputation as one of the national leaders in the solar energy market.”
The bill is expected to reach Cuomo’s desk by the end of the year.
Editor’s Note: North Carolina provides for a property tax exemption for solar water heating and active space heating or cooling systems. This means that the additional value of your solar system (relative to a conventional heating or cooling system) is excluded in the appraisal for property tax purposes. North Carolina also provides a property tax abatement for photovoltaic (PV) and solar thermal electric systems. The abatement exempts 80 percent of the appraised value of a PV system from property tax.
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