20 year Commitment for Solar Lease. Does anyone else think this is a long time?

[J.P.M.]

Hello new member here. We took over a 20 year lease transfer because we fell in love with a home but after reading more into the contract and not saving any money each month we are in quite the pickle.
From just my case if we make enough electricity we would only need to pay the service charge which is 19 bucks to our energy company. Plus the solar panel lease payment and it comes out to more then what we would of paid without solar.

Sunrun also has has refused to help in anyway just stating we signed the agreement so I it

Another case of emotion (love) governing logic and information.

Sunrun is one of the bottom feeder national leasing outfits.

Maybe the lease holder (probably not Sunrun BTW) will offer you an early buyout when the lucrative depreciation runs out.

[Chillybone]

Hello new member here. We took over a 20 year lease transfer because we fell in love with a home but after reading more into the contract and not saving any money each month we are in quite the pickle.
From just my case if we make enough electricity we would only need to pay the service charge which is 19 bucks to our energy company. Plus the solar panel lease payment and it comes out to more then what we would of paid without solar.

Sunrun also has has refused to help in anyway just stating we signed the agreement so I it

[J.P.M.]

You don't seem to understand what it means to "write it off".
It doesn't mean you paid $0 in interest.
It means if you paid $3000 in interest you don't have to pay taxes on that $3000. Which probably means you have ~$1000 less to pay in taxes to federal and state government.
It does not mean you have $3000 less to pay to federal and state gov't.
Now it might mean $1.2k less or $500 less - it really depends on how much you are taxed on those last few dollars of income. (your "marginal tax rate" - as opposed to your average tax rate, which is going to be a lower percentage)

You can look at it as if you're after-tax interest rate has been reduced by your marginal tax rate.
ex: 2.9% interest with a 25% federal tax and 8% state tax is effectively like it's a 1.94% interest rate loan. (2.9% * (100%-25%-8%) = 1.94%)

Right. Another person who doesn't know the difference between a tax deduction and a tax credit.

"write off" is an ill defined, imprecise and usually misused, misleading and confusing term.

[SunEagle]

I bought mine with a home equity loan with a 2.9 apr. My monthly heloc payment is less than my prior average monthly electric bill. Just hit the year mark and did my taxes and found ok out I was able to write off the heloc as mortage interest. My accountant said I could write it off every year so I paid zero in interest on it and will for the next 4 years.

Paying zero in interest and being able to list that interest as a deduction for your Fed Tax return are really two different things.

And now with the standard deduction going up I would expect to see less people using the itemized deductions on their tax returns.

[foo1bar]

My accountant said I could write it off every year so I paid zero in interest on it and will for the next 4 years.

You don't seem to understand what it means to "write it off".
It doesn't mean you paid $0 in interest.
It means if you paid $3000 in interest you don't have to pay taxes on that $3000. Which probably means you have ~$1000 less to pay in taxes to federal and state government.
It does not mean you have $3000 less to pay to federal and state gov't.
Now it might mean $1.2k less or $500 less - it really depends on how much you are taxed on those last few dollars of income. (your "marginal tax rate" - as opposed to your average tax rate, which is going to be a lower percentage)

You can look at it as if you're after-tax interest rate has been reduced by your marginal tax rate.
ex: 2.9% interest with a 25% federal tax and 8% state tax is effectively like it's a 1.94% interest rate loan. (2.9% * (100%-25%-8%) = 1.94%)

[J.P.M.]

I bought mine with a home equity loan with a 2.9 apr. My monthly heloc payment is less than my prior average monthly electric bill. Just hit the year mark and did my taxes and found ok out I was able to write off the heloc as mortage interest. My accountant said I could write it off every year so I paid zero in interest on it and will for the next 4 years.

HELOC is one possibility that's less onerous than other loans.

I always work off the logic to borrow for assets that appreciate and pay cash for those that are necessary but don't appreciate.

The way it looks, I'm not convinced that PV on a residential property will appreciate or add much to the resale value of a property, if not reduce it's salability.

Unless someone is prepared to do an economic analysis using time value of money that includes loan costs, tax consequences and other considerations as well as comparison of alternatives to see if a more financially productive alternate may exist for the assets other than residential PV, it's a moot point beyond the idea that borrowing costs money and that will lower the cost effectiveness of any asset.

[BFW577]

I bought mine with a home equity loan with a 2.9 apr. My monthly heloc payment is less than my prior average monthly electric bill. Just hit the year mark and did my taxes and found ok out I was able to write off the heloc as mortage interest. My accountant said I could write it off every year so I paid zero in interest on it and will for the next 4 years.

[J.P.M.]

Buying is almost always the way to go. If you have enough savings, the cash purchase will save you the most over time, as it has the shortest payback period of any financing option. In lieu of this, a loan is a great option, as many financiers have created special solar loan options. All in all, go solar, save yourself some money, help the environment, and become the owner of your home

I'd avoid solar loans. Most of them are scams and B.S. Best way is cash. If you need to finance it, there's a good chance you probably shouldn't be doing PV for financial reasons.

Also as Azdave notes, if you don't own the property the PV is attached to, you probably ought not o be putting your own assets into a PV system for that property.

[Mike90250]

Great for the lease company.

Terrible idea for the homeowner

[azdave]

Buying is almost always the way to go. If you have enough savings, the cash purchase will save you the most over time, as it has the shortest payback period of any financing option.

Well duh. Just make sure the ROI is about 5-7 years max.

In lieu of this, a loan is a great option, as many financiers have created special solar loan options.

A great option for the company loaning the money. Financiers have created special solar loan options because there is money to be made from people who don't mind being in debt.

All in all, go solar, save yourself some money, help the environment...

If you have to get a loan to do that then you aren't getting the best deal and probably should not be going solar. You would be better off investing the money elsewhere. You aren't helping the environment nearly as much as people would have you believe.

...and become the owner of your home.

If you don't own your home you better not be thinking of adding solar panels.

Buying is almost always the way to go. If you have enough savings, the cash purchase will save you the most over time, as it has the shortest payback period of any financing option. In lieu of this, a loan is a great option, as many financiers have created special solar loan options. All in all, go solar, save yourself some money, help the environment, and become the owner of your home

I would also recommend contacting professional companies to get details.

Buying is almost always the way to go. If you have enough savings, the cash purchase will save you the most over time, as it has the shortest payback period of any financing option. In lieu of this, a loan is a great option, as many financiers have created special solar loan options. All in all, go solar, save yourself some money, help the environment, and become the owner of your home

[foo1bar]

Has anyone else considered going solar with a 20 year Lease?

"considered" - yes - I did in the broad sense of the word.

If so, why did you decide to do it or not do it? This seems like a long commitment.

Why not - it's almost always a less attractive deal compared to buying.
I had a couple of them proposed to me while considering solar.

If you:
* can't use the tax credit at all
and
* know that you will absolutely not move out in the next 20 years (no matter if you change jobs, lose your job, etc)
and
* can't afford to pay for it up front
and
* can't get a reasonable rate loan for the installation

then *maybe* it could be slightly better financially
But probably not.

Average length someone stays in a house is 5 or 7 years I think. (Real estate agents have articles where someone has compiled statistics on it)
So even if you're not planning to move, I would still calculate whether you're better off in year 5 and in year 10 if you had to move at that point. (Typically the lease seller gives you a table of how much it'd cost to buy out the lease at various times)
You can even make it worse for the purchase side by including a cost of $4k for replacing the inverter in year 10.

BTW - make sure you use a realistic power output for the solar installation - the solar salesmen will generally not give you numbers that are reasonable for an average year.

[Kingram]

https://www.solar-estimate.org/solar-financing

[azdave]

As an individual, there are very few things in life you should ever lease (cars, furniture, appliances, solar panels, etc.). Leasing just means someone else is in the middle of your deal taking the majority of the benefits of ownership. Do not even think about it when it comes to solar.