How to Finance Your Solar Panels in New Mexico
Installing a rooftop solar system on your home may be one of the best decisions you can make to secure the long-term financial future of your family. However, there is often a disconnect between the long-term benefits and the short-term cost of installing the panels. Most families will need to finance all or part of their system. Luckily, there are many different options available to you. Let’s break them down.
There are two distinct approaches to financing your project. You can own your system or lease it. There are benefits to both. However, experts agree that owning your system is a far better investment. A trusted solar installer can not only help you determine the best solar panels for your home but also will likely have a good perspective about your budget and financial goals. Some local installers may also offer financing programs for qualified homeowners. Positive Energy Solar works with local lenders to offer many solar financing options, including no-money-down.
Buying your solar panels
Purchasing your solar system is the most popular option for homeowners because it is the best financial investment. When you buy your solar panels, you are eligible for municipal, state (not applicable in New Mexico at this time) and federal tax incentives, and you increase the resale value of your home.
The tax incentives for purchasing a solar panel system can be significant, such as a personal federal tax credit of up to 30% if you install your system before the end of 2019. For this federal program, there is no cap on the total cost of the solar system. In New Mexico, solar costs are not subject to sales tax, which saves you an additional 7-11%.
If you own your system, you also own all the power it generates. This allows you total autonomy in deciding how much energy to sell, use and store. Most local utilities will buy any power that you feed back into your local electricity grid. In some cases, this will lead to a net profit and the utility will pay you. In other cases, it may simply reduce or eliminate your need to buy energy (net-metering).
If you decide to buy your system, your bank may be a good first stop. You can finance the purchase of solar panels by taking out a loan or line of credit from a bank. Some banks offer ‘solar loans’ specifically for solar panel installation with competitive interest rates. At Positive Energy Solar, we have worked with local credit unions to find the best solar financing offers available to you. You can also consider the option of a home equity loan, or other loans against secured assets, because you may be able to claim the interest as a tax deduction.
Leasing your solar panels
We should note that Positive Energy Solar does not offer any solar leasing program in New Mexico. This option allows little to no upfront cost to install solar panels on your roof (just like a no-money-down loan) and may work for some homeowners who are certain they will never sell their homes in the future and do not have a taxable liability to be eligible to claim any tax credits. There are two main types of solar leases: you can lease the solar panel system or lease your rooftop to somebody who will operate, monitor and maintain their own solar system on it (also knowing as a Power Purchase Agreement, or PPA).
Leasing is less popular because you miss out on tax incentives and adding to the resale value of your home. Choosing a solar lease depends on whether you consider solar panels as a long-term investment. For example, as a homeowner, you don’t own a leased solar panel system, which can be a liability if you do decide to sell your home. The new buyer of your home would need to agree and qualify for the leasing program as a condition of sale, which can be off-putting for many potential home buyers. It can also be very expensive to buy out of these leases if you change your mind.
Finally, maintenance, repair or uninstallation costs may not be viable and can be tied to your home insurance premiums. If you decide that leasing is the right option for your family, make sure you research which leasing companies are reputable and understand all of the terms of the contract before signing. Many leases/PPA contain clauses allowing for annual rate increases and exorbitant buy-outs.
Talk to a trusted local installer about your financing options
Regardless of which solar financing option you are interested in, talk to a trusted local solar installer who can provide money-saving advice on all of your available financing options and understands your goals. They will help you not only find the best solar panel system for your home and budget but walk you through tax incentive programs applicable to you. Want to learn more? Get started with a solar consultation today!