No. In California, installing solar panels on your home does not increase your property taxes. State law excludes active solar energy systems from property tax reassessment, so the value of your rooftop panels or solar water heater is not added to your assessed value. That protection is scheduled to sunset on January 1, 2027, so systems completed after that date could be treated as ordinary new construction unless the legislature extends the exclusion again.1California State Board of Equalization. Active Solar Energy System Exclusion
Why Solar Would Normally Trigger a Reassessment
Under Proposition 13, your home is assessed at market value when you buy it, and that base year value can rise by no more than two percent per year afterward. The assessment only resets to current market value when ownership changes or when new construction is completed. If you build an addition or install a pool, the assessor adds the market value of that new work to your existing assessment.2California State Board of Equalization. Publication 800-10 – How Property Is Assessed for Property Tax Purposes
Bolting a solar system onto your roof would normally fit that definition of new construction. A $25,000 installation would mean $25,000 added to your assessed value, and a higher tax bill every year after. Revenue and Taxation Code Section 73 carves out a specific exception: an active solar energy system is not treated as “newly constructed” for property tax purposes, so the assessor leaves it off the roll.3California Legislative Information. California Code Revenue and Taxation Code 73
The exclusion applies to both residential and commercial properties.
What Qualifies as an Active Solar Energy System
Section 73 covers systems that use mechanical or electrical components to collect and convert sunlight into usable energy. Qualifying uses include generating electricity, heating water, space heating and cooling, process heat, and solar mechanical energy. Related equipment is included too, such as power conditioning equipment, transfer equipment, and storage devices that are part of the system.3California Legislative Information. California Code Revenue and Taxation Code 73
Rooftop photovoltaic panels and solar water heaters, the most common residential installations, both qualify.
Passive solar features do not. If your home was designed with south-facing windows, thermal mass walls, or roof overhangs that take advantage of natural sunlight, those design choices are built into the structure itself rather than being separate devices that collect and convert solar radiation, and they are not covered.
How to Make Sure the Exclusion Is Applied
If You Add Solar to a Home You Already Own
You do not need to file anything. The county assessor applies the exclusion automatically after receiving a copy of the building permit for your solar project.4California Board of Equalization. Active Solar Energy System Exclusion – Forms
Even so, check your next assessment notice to confirm the solar value was not accidentally included. Assessor offices process thousands of permits, and mistakes happen. A phone call clears it up quickly if something looks off.
If You Buy a New Construction Home With Solar Already Installed
This is the situation where homeowners most often lose the benefit. If a developer built the home with solar and you are the first owner moving in, you have to actively claim the exclusion by filing form BOE-64-SES, the Initial Purchaser Claim for Solar Energy System New Construction Exclusion, with your county assessor. Three conditions apply: the building must have been completed on or after January 1, 2008; the developer must not have already claimed the exclusion; and you must file the form with documentation showing what portion of the purchase price is attributable to the solar system.4California Board of Equalization. Active Solar Energy System Exclusion – Forms
Skip the form and the solar value stays baked into your base year assessment for as long as you own the home. The assessor is not going to prompt you. Ask the builder whether they already claimed the exclusion, and if the answer is no, file BOE-64-SES soon after closing.
Leased Panels and Power Purchase Agreements
Plenty of California homeowners don’t own their panels outright. They lease the system, or a third-party company owns the equipment under a power purchase agreement. The exclusion still applies. The system was excluded from the definition of new construction when it was installed, and it stays excluded as long as ownership of the system itself does not change. Systems installed on leased land or leased rooftops qualify too.
Watch the end of the lease. If you buy out a leased system, that purchase can terminate the exclusion and make the system assessable going forward. Returning the equipment to the leasing company at the end of the term does not affect your assessed value.
What Happens When You Sell
The exclusion protects you while you own the home. It does not transfer with the sale. When the home changes hands, the new owner’s base year value is set at the full purchase price, and that price presumably reflects the value of the solar installation. The buyer’s property taxes are calculated on what they paid, panels included.2California State Board of Equalization. Publication 800-10 – How Property Is Assessed for Property Tax Purposes
That is not a problem for you as the seller. You enjoyed lower taxes during ownership, and California research consistently shows that solar panels raise home sale prices, so the investment can come back to you at closing.
The January 2027 Sunset
The exclusion is not permanent. The legislature has extended it several times, and the current sunset date is January 1, 2027.1California State Board of Equalization. Active Solar Energy System Exclusion
Systems completed before that date keep the exclusion. If no further extension passes, installations completed on or after January 1, 2027 would be treated as ordinary new construction and added to the assessed value. California has repeatedly extended the exclusion in the past, but there is no guarantee the pattern continues, so the deadline is worth building into your installation timeline.
The timing matters more now that the federal incentive is gone. The 30 percent Residential Clean Energy Credit under Section 25D of the Internal Revenue Code was terminated for expenditures made after December 31, 2025 by the One Big Beautiful Bill, signed into law in 2025. The IRS treats the expenditure as made when the installation is completed, not when you sign the contract or put down a deposit, so a project finished in 2026 does not qualify for the credit regardless of when you paid.5Office of the Law Revision Counsel. 26 USC 25D – Residential Clean Energy Credit6Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under the One Big Beautiful Bill
With the federal credit expired, the California property tax exclusion is the most significant remaining tax benefit for residential solar, and its 2027 sunset is the next deadline to plan around.