Friends of mine in Massachusetts have been installing rooftop solar. Apparently there are some government handouts that expire at the end of 2016 that make it much more attractive to do now.
I’m wondering if the payback periods are not correctly calculated for a homeowner who is using savings that would otherwise be invested in stocks and bonds. Suppose that a solar array costs $50,000. Had that money been invested in stocks and bonds it might have yielded 2 percent or $1,000 per year. This $1,000 of income will be subject to a tax rate of anywhere from 25-40 percent, however, depending on city and state. The energy generated by the solar array and used within the home, however, is not taxed as income (but maybe if you end up selling it all back to the power company they will issue a 1099 and then you fill out a Schedule C for your power generating business?). Thus electricity for the person who buys a solar array goes from being paid for with post-tax money to being paid for with pre-tax money, no?
This perspective could be entirely wrong, though, if we bring in property tax. What if there is a 2 percent property tax on the extra $50,000 in home value? It seems that at least in some states there are specific exemptions preventing towns from raising assessments due to solar energy systems (e.g., Massachusetts).
What do readers think? Is now the time to do rooftop solar? On the one hand the government has set things up so that people who live in crummy apartments have to work longer hours to buy solar panels for rich homeowners. On the other hand, if one waits a few years the technology will presumably improve. I don’t like the idea of buying anything for the house unless it is sufficiently common to be found at Home Depot.