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I'm selling my home and wondering about the best way to handle my solar and SREC's

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  • I'm selling my home and wondering about the best way to handle my solar and SREC's

    Hi guys,

    I'm new here and wondering about some details around selling my home (in NJ, btw). I installed solar a little more than a year ago and I fully own the system. I am most likely selling my home and moving to CT and I'm trying to figure out the best way to recoup some of my solar investment so I'd love your thoughts or suggestions--especially from any of you familiar with this topic. As I see it, the main options I'm looking at are:

    Option 1: Sell everything (solar and SREC's) to the new buyer. If I do this, what's the best way to include the future estimate of what the home will generate based on it's track record so far? In other words, I'm pulling in roughly $1,800 per year in SREC's and my electric bill is $0 10 months out of the year saving roughly $175-$200 per month over the year. All of that adds up to a chunk of change and, in a perfect world, I'd love to have the buyer pay a portion.

    Option 2: I sell the solar but retain the SREC payouts. In this case, have any of you left a home (i.e. sold it) but kept receiving the SREC payments? I'm currently going through the Flett Exchange so the whole process is automated. My solar meter has a wireless data connection which means it's independent of my home wifi so I think the whole process could continue pretty independently of new homeowners.

    What do you guys think? My realtor has calculated the increase in my appraised value to include the solar value but I'd like to maximize what I can get without muddying the water for any potential buyers.

    Thanks in advance for your suggestions.

    Don

  • #2
    Get ready to write the check at closing.
    MSEE, PE

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    • #3
      If you look at your Real Estate as an investment. It had some cost-basis, to begin with, say $100k. Then you added solar power [$20k] which makes the updated cost-basis $120k. When you sell the property anything above $120k is taxable profit.

      I have owned five homes, each of them has been an investment property, so that is how I tend to look at real estate transactions.

      I would include the SRECs in the purchase to sweeten the deal for the prospective buyers and bump up the market price. But also to make the transaction a bit less complicated.
      4400w, Midnite Classic 150 charge-controller.

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      • #4
        Originally posted by organic farmer View Post
        If you look at your Real Estate as an investment. It had some cost-basis, to begin with, say $100k. Then you added solar power [$20k] which makes the updated cost-basis $120k. When you sell the property anything above $120k is taxable profit.

        I have owned five homes, each of them has been an investment property, so that is how I tend to look at real estate transactions.

        I would include the SRECs in the purchase to sweeten the deal for the prospective buyers and bump up the market price. But also to make the transaction a bit less complicated.
        Thanks, organic. That's what I was thinking but I was under the impression that anything above the appraised value would require the buyer to pay cash for over and above. In other words, if the appraised value is $350K then adding another $20K for the SREC's would require him to either have a separate loan or just pay in cash. That sounds like a tough pill for potential buyers to swallow which is why I'm interested in keeping the SREC's for myself.

        For anyone who has opted to keep the SREC's while selling the house, did you have to do anything in particular to set it up?
        Last edited by donh; 06-02-2018, 12:40 PM.

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        • #5
          If the solar fixtures are attached, they have become part of the house, if you pulled permits and had inspections, they must be valued in an appraisal with the rest of attached house fixtures (stairs, dishwasher, sun porch)

          Your job is to educate prospective buyers and their agents, the value the solar has retained. Simple math shows it's base cost, simple depreciation shows it's worth 50% of what you paid, the day after it was installed. You show (prove) the power bills and savings it provides for the next 20 years. You should break even on the cost of the solar.
          Powerfab top of pole PV mount (2) | Listeroid 6/1 w/st5 gen head | XW6048 inverter/chgr | Iota 48V/15A charger | Morningstar 60A MPPT | 48V, 800A NiFe Battery (in series)| 15, Evergreen 205w "12V" PV array on pole | Midnight ePanel | Grundfos 10 SO5-9 with 3 wire Franklin Electric motor (1/2hp 240V 1ph ) on a timer for 3 hr noontime run - Runs off PV ||
          || Midnight Classic 200 | 10, Evergreen 200w in a 160VOC array ||
          || VEC1093 12V Charger | Maha C401 aa/aaa Charger | SureSine | Sunsaver MPPT 15A

          solar: http://tinyurl.com/LMR-Solar
          gen: http://tinyurl.com/LMR-Lister

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          • #6
            Originally posted by Mike90250 View Post
            ... Simple math shows it's base cost, simple depreciation shows it's worth 50% of what you paid, the day after it was installed.
            I own a farm. Our accountant has said that the IRS requires solar equipment to depreciate out over 7 years. A 'straight-line' depreciation table would have to depreciate 1/7th per year, each year.


            4400w, Midnite Classic 150 charge-controller.

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            • #7
              Originally posted by organic farmer View Post

              I own a farm. Our accountant has said that the IRS requires solar equipment to depreciate out over 7 years. A 'straight-line' depreciation table would have to depreciate 1/7th per year, each year.

              Would this apply to the OP's home that is presumably a primary residence and not a rental? My guess is no.

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