Is it better to buy or lease solar panels in California?

What changed for 2026, stated from the statute

26 U.S.C. section 25D(h) reads: “The credit allowed under this section shall not apply with respect to any expenditures made after December 31, 2025.” Section 25D(e)(8)(A) reads: “Except as provided in subparagraph (B), an expenditure with respect to an item shall be treated as made when the original installation of the item is completed.” Section 25D(e)(8)(B) applies a different rule to expenditures made in connection with the construction or reconstruction of a structure, treating them as made when the taxpayer’s original use of the structure begins. The most recent amendment to the section is Pub. L. 119-21, section 70506, enacted 4 July 2025 (verified 18 September 2026).

The IRS states the same two points in its own words: “The credit is not available for any property placed in service after December 31, 2025,” and “You must claim the credit for the tax year when the property is installed, not merely purchased.” That page’s stated last review date is 4 July 2026 (verified 18 September 2026).

Read together: a purchase whose original installation is completed in 2026 has no section 25D credit for that expenditure, regardless of the date on the contract or the deposit. Section 25D(c) allows a valid unused credit to be carried to a succeeding taxable year, which is a separate matter and does not create a credit for a project that misses the expenditure date.

This is a reading of the statutory text, not tax advice, and it states no tax outcome for you. Take your own facts to a qualified tax professional and check current IRS guidance before relying on any of it.

Why that matters to the comparison, and only that far

A great many buy-versus-lease comparisons were built by taking a purchase price, subtracting a homeowner federal credit, and setting the remainder against a monthly third-party payment. If the project’s installation completes in 2026, that subtraction is not available. The comparison has to be redone.

That is a statement about arithmetic. It is not a statement that leasing is now the better choice, and nobody should read it that way. The change removes one number from one side of a comparison that also contains ownership, maintenance responsibility, contract term, escalators, transfer rights at a home sale and what the household wants to be committed to in fifteen or twenty years. Those did not move.

A provider’s tax position is not yours

When a company owns the equipment on your roof, the credit in play is a business investment credit under 26 U.S.C. section 48E, claimed by the owner of the property. Its own dates and restrictions are real: section 48E(e)(4)(A) provides that the section “shall not apply to any qualified property placed in service by the taxpayer after December 31, 2027, which is part of an applicable facility,” and section 48E(e)(4)(C) excepts energy storage technology placed in service at such a facility (verified 18 September 2026).

One point is worth stating precisely because it is widely garbled. Section 48E(i) denies the credit where the taxpayer rents or leases to a third party property “described in paragraph (1) or (4) of section 25D(d).” In section 25D(d), paragraph (1) is a qualified solar water heating property expenditure and paragraph (4) is a qualified small wind energy property expenditure. Residential solar electric property is paragraph (2), which section 48E(i) does not reference. So that leasing denial does not, on this text, reach a residential solar electricity lease or power purchase agreement.

None of it tells you what a lease or PPA will cost. A provider’s business credit is not a resident’s entitlement, and it does not establish savings. Treat any pitch that converts a provider’s tax position into your saving as a claim to be sourced, not a fact.

What actually differs between the four structures

Mechanism only. The figures belong on the disclosure document for your address, not on a web page.

A loan also raises a question the other three do not: whether a financing statement is filed against the system. See what a UCC-1 filing on a solar system is.

What does not differ: the property tax position

The California State Board of Equalization states that “the system is excluded whether it is leased or owned” and that “ownership of the system is not a condition of exclusion.” It describes the treatment as a new construction exclusion rather than an exemption, and states that installation of a qualifying system “will not result in either an increase or a decrease in the assessment of the existing property.” It also states that no form or filing is required to receive the exclusion (verified 18 September 2026).

Revenue and Taxation Code section 73(f) ends the exclusion at a subsequent change in ownership, either way. Section 73(i)(1) makes the section inoperative from 1 January 2027, with section 73(i)(2) preserving what qualified before then; the Board states the same sunset date (verified 17 September 2026). So property tax does not favour buying or leasing. It is not a discriminator here.

The other costs a comparison tends to leave out are on what a solar proposal does not price.

What the resale research says, and about which structure

Two Lawrence Berkeley National Laboratory studies get quoted in this argument, and they are not about the same thing.

• LBNL-6942E covered 3,951 PV and 18,871 non-PV home sales across eight states. Its fact sheet states: “All PV systems in this dataset were homeowner owned rather than leased” (verified 18 September 2026). Whatever it found, it found about host-owned systems. It says nothing about a lease or a PPA.
• LBNL-1007003 (January 2017) is the California-only third-party-ownership analysis: 20,106 home sales, of which 113 were third-party-owned PV. It “fails to uncover statistically significant premiums for TPO PV homes nor for those with pre-paid leases as compared to non-PV homes.” The authors immediately qualify that: “an absence of evidence of a TPO effect does not necessarily construe evidence of an effect’s absence; potentially more data might allow a smaller TPO effect to be discovered” (verified 18 September 2026).

Neither study supports a percentage promise about your house, in either direction. If a salesperson quotes a resale premium at you, ask which study, which ownership structure and which state.

The contract-side version of the same question is on selling a California home with a solar lease or PPA.

The documents that decide it for your address

Business and Professions Code section 7169(b) requires the Solar Energy System Disclosure Document on the front page or cover page of every solar energy contract, in boldface 16-point type, carrying “the total cost and payments for the system, including financing costs,” information on how and to whom complaints may be made, and the consumer’s cancellation right under section 7159. Section 7169(c)(10) expressly contemplates “information about the difference between a solar energy system lease and a solar energy system purchase” as supporting content, and section 7169(c)(11) covers the impacts of the financing or lease terms on the sale of the home, including balloon payments and system relocation if the contract is not assigned to the new owner (verified 17 September 2026). The CSLB publishes the document, in three-day and five-day versions in English and Spanish, with the separate Supporting Information form (verified 18 September 2026).

Get that document, completed, from every bidder — including the purchase bidders. It is the only place the comparison exists in numbers for your roof.

Questions that settle the comparison

The CPUC’s consumer guide directs consumers to ask about the company, the roof, the system design, the warranties, the method behind any bill-savings figure, the effect on a home sale and the timeline (verified 18 September 2026). Ask every bidder the same list and write the answers down.

• Is there a down payment, and if so what is it based on?
• What is the payment, when does it change, by how much, and where is the schedule in the contract?
• How was any bill-savings estimate calculated, and what assumptions and inputs went into it?
• Who owns the equipment, and who repairs it?
• If I sell my home, what are my options, and where in the contract is that written?
• What happens at the end of the term, in the contract’s words?
• What is your CSLB licence number, in what classification, and the salesperson’s home improvement salesperson registration number? The CPUC states the licence must be active and in classification C-46 (Solar Contractor), C-10 (Electrical Contractor) or B (General Building Contractor) to be valid for this work.

Questions and answers

A referral request is optional and separate

California Rate Relief is a private solar referral service. It is not a contractor, it does not install or finance anything, and it does not review contracts or give legal or tax advice. Sending project details is a referral request: it does not approve anything, does not determine a price, a payment or a tax result, and does not establish that any provider is available for your address.