The NYC Solar Property Tax Abatement Ends Soon
UPDATE: The New York City Property Tax Abatement has been extended and applies to solar systems placed in service before January 1, 2024.
After nearly 15 years of incentivising rooftop solar in The Big Apple, New York City’s Property Tax Abatement for Photovoltaic (PV) Equipment Expenditures Program is drawing to a close on January 1, 2024.
This property tax abatement is one of several solar incentives that make New York City a great market for residential solar. The abatement reduces the property tax burden of solar owners by up to 20% of the price paid for the system.
In this article, we’ll explore how the abatement works, who is eligible, and how to claim it.
This article does not consitute tax advice. Always consult a licensed tax professional regarding questions about solar tax abatements, exemptions, and credits.
What is the NYC Solar Property Tax Abatement?
Run by the NYC Department of Buildings, the NYC solar property tax abatement allows homeowners to reduce their property tax liability by 5% of cost of their solar installation each year for four consecutive years.
Several studies have shown that solar systems increase home value. While increased home value is great when it’s time to sell, it can also increase how much you pay in property tax. The NYC solar property tax abatement reduces this tax burden as a means of incentivizing home solar.
Abatements vs exemptions
Over 30 states — including New York (outside of NYC) — have property tax exemptions for the home valued added by solar systems. Basically, an exemption works by ignoring the additional value added by the solar system. So, if you’re home was worth $400,000 before going solar and $430,000 after going solar, you would still pay property tax based on the original $400,000 valuation.
- Abatement: A reduction in property taxes over a certain period of time
- Exemption: A reduction in the taxable value of the property
That’s sort of a mouthful, so let’s break the NYC abatement down step by step.
How does the NYC Solar Property Tax Abatement work?
First of all, the abatement is based on the price you paid for the solar system — including equipment, labor, and soft costs (design, permitting fees, etc). It does not apply to financing costs or interest paid on a solar loan. The maximum abatement is $62,500 per year or your annual property tax liability (whichever is less).
So, let’s say you purchase a 5 kW solar system for $20,000. Your abatement would be worth $1,000 per year, and you can claim it for four consecutive yeras for a total incentive of $4,000.
However, most New Yorkers are Con Edison customers and are therefore eligible for the NY-Sun Megawatt Block rebate through NYSERDA, which reduces the upfront cost of going solar. In the Con Edison region, this rebate is currently worth 20 cents per Watt of solar capacity installed.
Let’s see how that plays out with our 5 kW system with a gross price of $20,000.
|Gross price of solar system (5 kW system)||$20,000|
|NYSERDA rebate (20 cents/W)||-$1,000|
|Price paid for solar system||$19,000|
|Year 1 tax abatement (5% of price paid)||$950|
|Year 2 tax abatement (5% of price paid)||$950|
|Year 3 tax abatement (5% of price paid)||$950|
|Year 4 tax abatement (5% of price paid)||$950|
|Total abatement incentive||$3,800|
As you can see, the property tax abatement applies to the cost of the system after the NYSERDA rebate is applied.
The NYC solar property tax abatement can also be combined with federal and state tax credits. However, claiming these credits does not change the price paid for the system and therefore does not affect the value of the property tax abatement.
Combining the NYC solar tax abatement with rebates and tax credits
Just for fun, let’s see how much combining all of solar incentives available in New York City reduces the cost of a 5 kW system with a gross price of $20,000.
|Gross price of solar system (5 kW)||$20,000|
|NYSERDA rebate (20 cents/Watt)||-$1,000|
|Price paid for solar system||$19,000|
|Federal tax credit (30%)||-$5,700|
|State tax credit (25%)||-$4,750|
|NYC property tax abatement||-$3,800|
|Net cost of solar system||$4,750|
For those keeping score at home, combining these incentives reduces the cost of going solar by more than 75%.
The video below provides a full breakdown of solar incentives in New York state.
Who is eligible for the NYC Solar Property Tax Abatement?
The NYC solar property tax abatement is available to “property owners that install solar electric-generating systems (photovoltaic solar panels) on their buildings,” according to NYC buildings.
The abatement is only available to property owners in New York City and applies to systems “placed in service” by January 1, 2024. Placed in service refers to the date your received permission to turn on (PTO) or the sign-off date on your electric permit — whichever is later.
Keep in mind: It typically takes 3-5 months for a solar project to go from design to PTO, so plan ahead to beat the Jan. 1 deadline!
As we mentioned above, New York State also has a solar property tax exemption. This exemption cannot be combined with the NYC solar property tax abatment. However, it’s unclear the exemption will apply to New York City solar owners after the abatement expires.
How to claim the NYC Solar Property Tax Abatement
You and your project manager will need to complete the PTA4: Property Tax Abatement Application and Agreement for Solar Electric Generating System in order to claim this incentive, part of which pictured below.
Screenshot of Application PTA4 for claiming the tax abatement
To be honest, this form takes some planning and cooperation to fill out. For example, it requires the signature of a “registered design professional.” These instruction from NYC Buildings may be of some help, but it’s best to mention this to your solar installer early in the process.
If you submit a complete and accurate PTA4 by March 15, the abatement will kick in on the July 1 tax bill of the same year. If you miss the March 15 deadline, the abatement will take effect on July 1 of the following year.
The bottom line
The NYC solar property tax abatement is one of many incentives that make New York City one of the best places for solar savings. The abatement reduces the amount of property tax you pay by 5% of the cost of your solar system each year for four consecutive years.
This incentive applies only to solar systems placed in service before January 1, 2024. Given that solar projects typically take 3-5 months to complete, it’s best to start a project as soon as possible in order to qualify for the abatement.