Property Tax Exemptions for Renewable Energy Systems

• Author: Brandon Hanson
• Pages: 91-95

Part 2: Create Incentives 91

PROP ERTY TA X EXE MP TIO NS

FOR REN EWABL E

ENER GY SYSTE MS

Brandon Hanson (author)

Jonathan Rosenbloom & Christopher Duerksen (editors)

INTRODUCTION

Renewable energy generation systems, like solar pa nels and geothermal, have

the potential to increase property va lues.1 However, even with incentives and

rebates, some property owners may be hesitant to install renewable energy

generation systems because the increased value often translates into higher

property taxes. A n ordinance that exempts the value augmented to property

by the addition of renewable energy generation systems from property taxes

makes owning solar, wind, geotherma l or other renewable energy sources less

burdensome a nd may encourage increased renewable systems.

is ordinance entices people to insta ll and own renewable energy systems

by exempting the added value of renewable energy systems from property t ax

assessments. Local governments can draft t his ordinance to give homeown-

ers the ability to have the additional value of property created by a renewable

energy generation system, exempted from the taxable value of their prop-

er t y.2 is would ma ke the taxable value of the home the same as before

the renewable energy s ystem wa s insta lled.3 is ordinance may contain the

types of renewable energy systems that qualif y for the property tax exemp-

tion (typically a very inclusive list), the maximum a mount that is exempt,

and the proof necessary to show the amount exempted (usually determined

by an assessor or percentage of the renewable energy system).4 Ordinances

can be created to include exemptions for residential and/or commercial prop-

erty, making them benecial to business owners as well residential property

owners.5

Over half the states have some form of tax exemption, either on the state

level or a local opt-in or out program.6 Some states mandate that local gov-

ernments provide some form of tax exemption for solar panels that can be

adjusted by the local government.7 A full list of tax incentives for property

and other taxes can be found in the Green Tax Incentive Compendium.8