Unless you've been living under a rock, you are well-aware of the solar panel craze that is happening. With aggressive incentives, massive saving possibilities, the ability to limit greenhouse gas emissions while decreasing your personal carbon footprint, home solar panels are increasingly popular.

Now that homeowners know that solar power is the way to go, it's time to address whether buying or leasing is right for you. The key differences come down to finances. Let's explore further.

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Buying Solar Panels

State Incentives & Rebates

Purchasing a solar panel system outright is a fairly large investment. Luckily, there are several incentives and rebates for consumers to take advantage of, all of which help mitigate upfront costs.

With help from renewable energy rebates, you may be able to reduce your solar panel costs by up to 50 percent or qualify for $0 down!

Since rebates and incentives vary from state to state, be sure you're finding solar offers that apply to you.

Solar Investment Tax Credit

A big pro when it comes to the buying versus leasing argument? Solar panel owners get to enjoy the solar Investment Tax Credit, or ITC. What's the ITC? It's a credit that new residential and commercial solar owners can use, which allows them to deduct a whopping 26 percent of the cost of the system from their federal taxes. That percentage is expected to drop each year, so if you're looking to get the maximum benefit from the ITC, time is of the essence.

Yearly Return on Investment

What about your solar panel ROI? Of course this depends on a variety of factors, but many see their annual returns ranging anywhere from 10 to upwards of 30 percent.

If you have a 5 kW solar PV system, you can potentially see an ROI of 20% in the first year alone!

Solar panel systems have a great return on investment, making them a cost-effective way to power your home in the long run.

Leasing Solar Panels

State Incentives & Rebates

When you lease solar panels, you're paying to rent the system. Since you're not the system owner, any incentives and rebates that are available for renewable energy would go to the company you're leasing from, not to you.

While you wouldn't get access to these incentives, leasing a system doesn't have the upfront costs that purchasing does. Many companies allow you to get started on a lease program with a $0-down agreement.

Solar Investment Tax Credit

Unfortunately, should you decide to lease your solar energy system, you won't be eligible for the solar Investment Tax Credit, as it is reserved for those who own their system.

Yearly Return on Investment

Even though you're not investing in a solar panel system, you can still expect to see significant savings on your electricity bill when making the switch to renewable energy. Many solar companies offer lease contracts that start as low as $50 per month. Just be sure to pay attention to the contract offered, particularly any escalator clauses that are included.

It's important to note that on average, it ends up being more expensive to lease a system than buying it outright. This, of course, depends on many factors, including how long you plan to use solar energy.

Let's Review

If you ...

Are looking to maximize your solar savings
Would like to increase the resale value of your home
Want to take advantage of solar incentives, rebates, and tax credits

... then purchasing a solar energy system may be right for you.

If you ...

Have a sub-prime credit score
Don't want to deal with upfront costs
Are not looking to maximize long-term savings

... then leasing may be the way to go.

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Buying vs. Leasing Solar Panels

Which is right for you?