Congratulations on buying your first house! Purchasing a home is a huge undertaking, and it's natural to feel overwhelmed by the prospect of immediately arranging extensive renovations and upgrades.
But, we are here to make things easier for you. We believe that first-time homebuyers would benefit greatly from installing portable solar panels because of the long-term savings and subsequent increase in property value.
In this blog, we have outlined some important things to consider before making the switch to solar power as a first-time homeowner.
How to Pay for a Portable Solar Panel as a First-Time Homebuyer
You may not have enough money stashed away to afford solar panels outright if you've just bought your first house. Fortunately, you can pay for a portable solar panel system in a number of other ways.
Secured and unsecured loan options are the two main options available for solar energy projects. If you've recently put a large chunk of change toward a home's down payment, you'll be relieved to learn that neither form of solar loan normally demands a similar sum.
However, there are a few factors you must consider about either loan type before committing to one of them.
Secured loans (sometimes also referred to as 'second mortgages'), typically have low rates of interest that are also tax deductible, so they can be appealing. That said, it is important to remember that this type of loan also necessitates collateral, often in the form of your property. This means that the lender has the right to take back your home if you ever stop paying on the loan.
If you've recently bought your first house and taken on a lot of debt (mortgage), it can be tough to qualify for a secured loan because you will not have much equity in your property, and your debt-to-income ratio will be unfavorable.
Moreover, unless you can pay off the solar loan in full before selling your home, secured loans might not be the ideal option if you want to do so within the next few years. The loan sum must be paid in full when the home is sold, although this is easily doable with the proceeds from the extra revenue from the increase in value brought about by the portable solar panels.
If you opt for an unsecured loan, you can avoid having to put up your home as collateral. Unsecured loans, however, typically have higher interest rates that are not tax deductible, since the bulk of the risk resides with the lender. The loan provider is unlikely to charge any tax on the savings you generate through the ITC (Investment Tax Credit), which we will be discussing shortly.
Unsecured loans are a better option if you plan to sell your house before paying off your debt. After moving out, you still have to pay off the debt, but you have the remaining duration of the loan (which can be anywhere from five to twenty years) to do it. Your credit rating may take a hit if you fail to make payments on an unsecured loan.
Investment Tax Credit
Thanks to the ITC, you can deduct 26% of the price of installing a solar energy system from your federal income tax. Through 2022, the ITC will be set at 26%; in 2023, it will be reduced to 22%; and from 2024, no investment tax credit will be offered for residential solar installations.
Therefore, you should not delay in having a solar energy system installed on your new residence.
ITC – Eligibility
To qualify for the solar ITC, you must fulfill the following requirements:
- You must be the legal owner of your residence; renters are ineligible for the ITC.
- You must be the legal owner of your portable solar panels; leased solar systems are ineligible for the ITC. Remember that you are eligible for an ITC even if you use a loan to purchase your solar panels.
- You must pay a sufficient amount of tax to the federal government so as to qualify for the ITC (remember that the ITC is not a rebate but a tax credit).
How Can You Receive Your Solar Tax Credit?
To claim the renewable energy tax credit and receive a refund, you need to fill out the IRS form 5695 while doing taxes, and include the credit information for your renewable energy to the usual form 1040. This credit is automatically included in many federal tax preparation programs. Inform your tax preparer or accountant that you have invested in solar energy.
However, if your tax liability is less than the amount of tax credit, you will owe no taxes and will get the difference as a refund after withholding. Also, if you don't have enough tax liability in the first year to use the entire tax credit, you can carry it forward to use against future tax liabilities (this can be done for as long as the ITC stays in effect).
Through net metering, any extra power produced by your solar panels can be fed back into the national grid. In return, you receive credits that can be used to draw power from the grid when your solar panels are not producing enough energy on their own (such as at night). If the amount of energy you use from the grid exceeds the amount of excess solar energy you provide, you will only have to pay for the difference. It is crucial to install a system size that suits your demands because your utility is unlikely to compensate you for excess production if you create more energy than you consume from the grid.
How Does Net Metering Work?
Suppose you had a net-metering solar panel system installed. At any time in the day when your portable solar panels produce more energy than you use, the excess is transferred back to the grid, effectively causing your electricity meter to reverse. At night or on overcast days, when your solar panels aren't producing as much power as you're using, you can use electricity from the grid, and your meter will run forwards, depending upon the amount of electricity you use.
Net metering refers to the process of being billed at the end of each month or year for the difference between the quantity of energy you added to the grid and the amount of energy you used.
Powering your home for a whole year is possible with a portable solar energy system of the right size. However, your solar panels' ability to generate power will fluctuate throughout the year, producing more during the sunny summer months and less during the shorter, darker winter months. Using net metering, you can get credit for the extra energy generated by your solar panels and save it for later use, mitigating the impact of seasonal variations in solar output.
Alternatives To Net Metering
The most common method of getting solar energy credits back is through regular net metering. However, there may be other options available to you based on your location and the policies of your utility provider and state.
Sell All/Buy All
The sell all/ buy all metering approach allows customers to sell all of the energy their solar panels produce to the local utility. In exchange, the utility supplies all of the customer's home's energy needs at the standard retail rate.
With this method of net metering, the user is responsible for covering the deficit between the quantity of energy generated and the amount of energy consumed. When your solar panels produce more energy than you use, you can sell it back to the grid under a buy-all/sell-all net metering arrangement.
This form of net metering is more popular in business settings, and it allows you to use the electricity produced by your portable solar panels while selling the excess to the utility company. A drawback of this net metering model is that credits cannot be carried forward to subsequent billing periods.
Confused About Getting a Portable Solar Panel for Your Home? Here Are a Few Things to Remember
Portable is Easy
With a conventional, roof solar panel, you would have had to install the system during the construction phase of your home. The reason for this is that incorporating a solar energy system into a new construction is far simpler and less expensive than retrofitting an existing property.
However, this is not something you have to worry about with portable solar panels, since they do not require any installation and can be used as soon as they are purchased.
Solar Power Lowers Energy Bills
You have got a lot on your plate already as a new homeowner. You may relieve some of the financial strain by cutting your electricity costs. Going solar could protect you from rising energy costs. If you have a portable solar energy system, you may start saving money on your electricity bill as soon as the system is put to use. When your solar panels are your primary source of electricity, you may cut back on your use of the grid and your monthly utility costs.
Solar Power Pays for Itself
You can make the most of rebates and other financial benefits by financing your solar system through a loan or incorporating the charges in your mortgage. As mentioned, you may be eligible for a solar credit tax that can considerably lower the investment cost of your solar panel. A few states also provide financial incentives, such as tax credits, rebates, and local incentives that make solar electricity even more affordable.
The cash buy, loan, or lease/PPA choices all provide financial benefits and can determine how long it takes for you to recoup your solar system investment. Regardless, the return is likely to be substantial, considering the potential reduction of your power bill and the possibility of benefiting from the solar tax credit and/or local solar incentives.
Solar Power Benefits the Environment
Sustainable design features that help homeowners reduce their environmental impact and their monthly energy bills are a popular selling point for newly constructed homes.
Many people are worried about the planet being destroyed due to climate change; by switching to solar, you can do your part in mitigating this pressing issue. In fact, you could even combine solar energy with other eco-friendly energy sources. If you have an electric car, for instance, you may use solar electricity to charge the battery, therefore relying exclusively on environmentally-friendly energy sources.
Hone Your Home With Portable Solar Panels
Purchasing portable solar panels for your new home is one of the smartest decisions you can make. Solar energy systems need minimal initial investment and can provide long-term cost savings and environmental benefits.
If you are looking for a portable solar panel system for your house, we invite you to check out our wide range of options. We offer many different types of portable solar panels, generators, and kits, and can help you choose one based on your energy requirements, budget, and saving targets.