Solar Energy System Exclusion

R & T Code 73, Assembly Bill 1451 (Ch. 538, Stats. 2008)

The property tax incentive for the installation of an active solar energy system is in the form of a new construction exclusion. Therefore, the installation of a qualifying solar energy system will not result in either an increase or a decrease in the assessment of the existing property.

If you have purchased or intend to purchase a new house with an active solar energy system (see definition below) you are eligible for a reduction in the assessment is you can provide the following:

  • Clear evidence that the sales price included the value of the active solar energy system

The documentation necessary should be part of the closing set of escrow papers.  This value then is not part of the base year value of your property.
Example:  If you purchase a property for $525,000, and it is deemed that $25,000 was attributable to an active solar energy system, then your base year value would be $500,000.

  • In order for you to be eligible for this exclusion, the initial owner-builder must meet these requirements:
    • The solar energy system is constructed in a new building in which the owner-builder incorporated the system in the initial construction of the new building.
    • The owner-builder does not intend to occupy or use the new building.
    • The owner-builder does not receive the exclusion for the same system.
    • The initial purchaser purchased the new building prior to the building being assessed to the owner-builder.
  • A completed application for the active solar energy system exclusion

An active solar energy system is defined as: a system that uses solar devices, which are thermally isolated from living space or any other area where the energy is used, to provide for the collection, storage, or distribution of solar energy.

An active solar energy system may be used for any of the following:

  • Domestic, recreational, therapeutic, or service water heating
  • Space conditioning
  • Production of electricity
  • Process heat
  • Solar mechanical energy

Such a system does not include solar swimming pool heaters, hot tub heaters, passive energy systems, or wind energy systems.

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