Should You Invest in Solar Panels for Your Rental Property?

As a landlord, you’re likely thinking of strategies to attract more tenants while minimizing the expenses associated with rental property ownership. You may also be on the hunt for ways to maintain or boost your property’s value. Perhaps you also want to become a more eco-conscious individual and business owner.

In that case, now’s the best time to invest in solar for your rental property.

But how exactly can solar installation benefit you as a landlord? What perks does it offer to renters that would make them more likely to want to become your tenant? 

This guide discusses the vital facts you need to know about solar energy and why you should invest in it, so read on. 

Make Your Property More Attractive to Prospective Tenants

In a recent survey of 2,000 U.S. renters, 2 in 3 said they want to rent a place that implements green practices. About 4 in 10 even stated they wouldn’t rent a property that doesn’t have such practices in place.

Using solar panel systems instead of relying on the grid for fossil fuel-based electricity is an example of a green practice. After all, these systems convert solar energy, which is clean and renewable, into usable electricity.

During operation, solar energy systems don’t produce air pollutants, either. Neither do they emit greenhouse gases (GHGs) like carbon dioxide. By contrast, burning fossil fuels for electricity production does both. 

So, with a solar energy system, you can make your rental property a “greener” building. It can help reduce your and your potential tenants’ carbon footprints. This can help make your property more attractive to renters, especially the eco-conscious ones. 

Save Money on Energy Bills

With a solar panel system, you can generate electricity at home (or on your rental property). This reduces your need to tap the grid and rely on your utility company’s electricity. The less electricity you have to “take” from them, the lower your energy bills can get.

Suppose you cover your tenants’ electricity bills as part of the lease agreement. Then that’s all the more reason to invest in solar and work with residential solar panel experts


A robust enough solar power system can cover the entire energy usage of your rental property. Depending on how much your typical energy bills are, this can translate to massive energy savings over the years. For instance, you could save over a thousand dollars yearly if, like the average U.S. household, you pay over $1,600 a year for electricity alone. 

Incentivize Tenants to Make Them Stay 

What if you don’t shoulder your renters’ electricity bills? Can you, as a landlord, still benefit from investing in solar?


One way is by helping your tenants save on their electricity bills, which is an incredible perk for many. Since they would have fewer expenses, they’ll be more likely to pay their rent on time. 

Being able to save can also make your renters happy, which could make them want to stay in your property longer. They’ll be more likely to renew their lease, saving you from the cost and headaches of finding new tenants. 

Boost Your Property’s Value

Solar panels, like kitchen renovations, are property upgrades that can increase property values.

Real estate experts attest to this, with Appraisal Journal saying that for every $1 decrease in yearly energy bills, the value of a home goes up by $20. As a result, you can ask for a higher price if you ever decide to sell your home. Moreover, eco-conscious buyers are willing to pay thousands more for a home with solar panels. 

Enjoy Potential Property and Sales Tax Exemptions

Usually, projects that improve real estate property values would result in higher property taxes. Likewise, purchasing goods and services also often comes with sales tax.

Fortunately, many states don’t impose those taxes on solar-related improvements, products, and services. For instance, property tax exemptions for investing in solar technologies are available in 36 states. There are also 25 states offering sales tax exemptions on the purchase of solar equipment.

Let’s say you live in a state with a solar property tax exemption, such as New Jersey. If so, you won’t have to pay more property taxes even if your solar power system increases your property’s value.

If you live in Arizona, lucky you, as the state offers solar property and sales tax exemptions. So, aside from saving on property taxes, you can also save the money you’d otherwise have paid for sales tax. 

Reduce Taxes You May Owe

In the hopes of encouraging more property owners to go solar, Congress has extended the federal solar investment tax credit (ITC). With this, qualified taxpayers can get a 30% tax credit on eligible systems until 2032. It’s a dollar-for-dollar tax credit that can reduce the taxes a person owes.

For example, a 30% tax credit on a $25,000 system would be $7,500. However, this only applies to situations wherein a homeowner lives on the property where the system is 100% of the time.

You may still be able to claim a portion of the tax credit on a solar power system you install in your rental property. However, you must live on the property for at least part of the year. The credit you could get would be proportionate to the time you reside in the property. 

Let’s say you live in your rental property for 35% of the year. If so, you can claim 35% of the credit you would have otherwise received if you lived in the property for the entire year. So, for a $7,500 tax credit, you may be eligible for a credit of $2,625. 

Invest in Solar Energy to Make Your Property Greener

From turning your rental property into a greener building to attracting more tenants and helping you save on energy bills, these are just some of the top reasons to invest in solar. Don’t forget you could enjoy tax breaks, too, such as property and sales tax exemptions and the federal ITC. 

So, if you haven’t installed a solar energy system in your rental property yet, now’s an excellent time for you to do so.

Did you like this article? Then check out our other real estate and home improvement guides!

Leave a Comment