When you decide that you want solar on your home, the next BIG question that you have to answer is do you want to buy your system out right or is it a better option to lease the system. The major difference between the two options is owner ship. Ownership is significant because you can take advantage of the famous federal tax credit that comes with solar. A lease allows you to take advantage of immediate savings with $0 upfront costs. You also do not have to worry about the hassles of owning a solar system yourself because the company you lease it from owns it and will ensure that it is in top working condition. Therefore, the question that becomes about do you want to maximize your ROI (Return On Investment) by owning the system or do you want to start significantly saving right away. In this article, I will be helping you out with understanding the two options. Both options have their perks and possible downsides depending on your situation.
Benefits of Both Owning and Leasing
Just like with a car, the choice between buying and leasing is a tough call, but in both scenarios, you will save money. By adding a solar energy system to your home or commercial building, you can:
- Consume the power you generate at a significantly lower cost per watt.
- Earn utility company credits for sending unused electricity back to the grid
- Reduce your use of fossil-fuel-based electricity and prevent tons of carbon from entering our planet’s atmosphere each year
Specific Benefits of Owning
For those looking to maximize their ROI
The one major difference between lease and purchase is that if the system is purchased out right from the start then you may be eligible for the Federal Tax Credit. The Federal Tax credit is one of the most attractive things about going solar. The Federal Solar Tax Credit, also known as investment tax credit (ITC), allows you to deduct 26% of the cost of your solar energy system with no cap from your Federal taxes if purchased in 2021. The percentages allowed for the tax credit downgrades in following years, so now is the time to buy. Check with your tax people to find out if you would qualify.
When Purchasing your system out right you can absorb the purchase within you mortgage which can then be made payments on along with your home. You can also take out a loan either through Lifestyle Energy or you have the option of going through any lender of your choice. No one choice is better than the other because it is all based upon what you the buyer feel fits and works the best for yourself.
- By owning your solar energy system, you will maximize the financial benefits of installing a solar panel system. There is no better way to leverage additional capital than to invest it in the purchase of a solar energy system.
- Increase the market value of your home by installing a solar panel system.
- Be eligible to reduce your federal tax liability through the federal investment tax credit.
Specific Cons to Owning
- High Upfront Cost Investment
- 5-7 Year breakeven for a purchase
- Must own long enough to see the savings
Specific Benefits of Leasing
For those looking for immediate savings with no upfront costs.
So what are your options with leasing. Well unlike the purchase option there is no Federal Tax Credit option when leasing. What you do get is a fixed monthly solar payment for 25-years and $0 down to start the process of obtaining solar. So what's so attractive about leasing? Well what is nice about the fixed monthly solar payment is that you are investing in yourself rather than paying the utility companies. In addition, the utility companies billing is an up and down roller coaster that can cause stress and worry with budgeting. The fixed monthly solar payment will not rise or lower so budgeting can be more pinpoint than ever before, NO SURPRISES.
Circling back to the $0 down option that was stated in the previous paragraph. This part of leasing is also nice for buyers who are unable or uncomfortable with the up front cost that come when purchasing a solar system.
- Go solar with nothing out-of-pocket, $0 down!
- See immediate savings by reducing your electricity costs by 30% – 50%
- Leases are guaranteed to be fully transferrable
Specific Cons of Leasing
- No tax credit benefits – already baked into the savings
Visit the buy vs leasing comparison table above!
Below is a complete side by side between Lease & Purchase
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