Working homeowners with taxable income will be able to utilize the 30% Federal Income Tax Credit and discount the purchase price of their system significantly. This is not available to homeowners who lease their equipment. Since the Federal tax credit goes to the system owner, the finance/leasing company gets that 30% credit in a lease. Leases are useful to people who are not looking to get maximum tax advantage from their transition to solar.
Typically, retired homeowners generally do not have tax liabilities. For them, leasing is a great way to cap electricity expenses. The New York State tax credit (caps at $5,000) is available to all homeowners that go solar in New York, regardless of whether the system is leased or owned. Latest studies indicate more people are choosing to own their solar system.
Think long term. While a low monthly solar lease payment looks enticing, those savings can quickly evaporate with annual escalators. Larger, national solar companies use escalators in a generic approach to finance. With your monthly payment raising 1.5% or even 2.9% annually you will not see much value in switching from PSEG (LIPA) since historically most local utilities average less than 4.5% increases per annum. Insist on a fixed rate loan or a lease with 0% escalator.
At the end of the lease term you either remove it or lease a new system. Leases do not allow for the purchase of the system except upon sale of the property. In a financed purchase the payments stop when the system is paid off. From that day on the homeowner enjoys payment free use of the system. There are premium systems that are reliably producing power for more than 30 years.
The majority of residential solar systems that are purchased by the homeowner are financed. Not only do you utilize both Federal and NYS tax credits, you can select the type of financing that fits your financial plan. There are several solar loans available depending on credit score and desired term of loan. Terms vary from 5 years to 20 with rates starting as low as 2.99%.