How the Prepaid TPO (third-party owned) works
A finance partner claims the federal tax credit and takes it off your price. You finance less, and after year 5 the system is yours.
A finance partner claims the tax credit
Homeowners who buy solar can no longer claim the federal credit. A business that owns the system still can, so the partner owns yours for the first five years.
They take it off your price
The value of the credit comes off your price upfront, as a discount. Nothing to file, and it doesn't depend on your taxes.
You finance the smaller amount
A fixed monthly loan payment on the discounted price: $98 a month on $13,150 instead of $140 a month on $18,800. Where available, you can pay it once instead.
After year 5, it's yours
Ownership transfers to you automatically. No buyout, no fee. If you financed, your payment stays the same until the loan is paid off.
About 30% less to finance, and you own the system either way.Sample figures for a 7.2 kW system. Yours come from your roof and your installer's bid.
Prepaid TPO loan vs. regular solar loan
Same system, same loan terms. Drag the price to match your quote and see what the Prepaid TPO loan saves you.
Regular solar loan
- Tax credit
- None
- Loan amount
- $18,800
- Fixed monthly payment
- $140/mo
- Total paid over 20 years
- $33,600
Prepaid TPO loan
- Tax credit off the price
- −$5,650
- Loan amount
- $13,150
- Fixed monthly payment
- $98/mo
- Total paid over 20 years
- $23,520
Same system, same loan terms, and you own it either way. The Prepaid TPO loan is $5,650 smaller — $42 less every month.
How this sample math works
Sample math, not a quote. Both columns assume the same 20-year term at 5.24% APR with lender fees included, and a built-in credit value of about 30% of the system price (the exact amount depends on your provider and equipment). Where available, the Prepaid TPO can also be paid once, upfront, at the same discounted price, with no monthly payment at all. Your real numbers come from your roof, your usage, and your installer's bid.
Who owns it, year by year
Day to day, nothing changes while the partner holds the title.
Partner holds title and claims the creditYou own it, for good
Day 1
Your system turns on
You use every kilowatt-hour it makes. If you financed, your fixed monthly payment starts.
Years 1–5
Partner's name on the title
That's what lets them claim the credit and pass it to you. For you: same roof, same power, same payment.
After year 5
Your name on the title
Transfers automatically, with no buyout and nothing to sign. Your payment continues on the same schedule until it's paid off.
Why five years? Federal rules say whoever claims the credit has to own the system for five years, or pay the credit back. So the transfer is set for the first point it's allowed: after year 5. Changed your mind? You can opt out in writing up to 90 days before then.
Why a partner has to be involved
There were always two federal solar tax credits. Congress ended one of them at the end of 2025.
Through 2025
You bought it, you claimed it
- Homeowner credit: available
- Business credit: available
You paid full price, filed for the credit on your own tax return, and got the value back later, if you owed enough tax to use it.
2026 and on
Only a business can claim it
- Homeowner credit: ended
- Business credit: still available
If you buy, there's nothing left to file for. If a business owns the system on your roof, it can still claim the credit and pass the value to you.
The credit is worth the same money as before. It just has to be claimed by a business and passed to you. That's what the Prepaid TPO is for.
Watch Sam explain it
Sam Wigness, who writes Solar.com's homeowner guides, walks through it.
Sam WignessSolar.com
Questions
Do I have to file anything to get the credit?
No. It's already off your price. Nothing to claim on your taxes, and it doesn't depend on what you owe.
Do I have to pay the discounted price upfront?
No. You can finance it with a fixed monthly payment, like a regular solar loan, and the payment never goes up. Paying once is an option where available, not a requirement.
Do I have to do anything at year 5?
No. It transfers to you automatically, with no buyout and nothing to sign. Don't want it? Opt out in writing up to 90 days before the end of year 5.
What happens to my payment after year 5?
Nothing changes. Same fixed amount, same schedule, until it's paid off. You just own the system while you do it. If you paid once, there was never a monthly payment.
Why can't I claim the credit myself, like people used to?
Because that credit ended. The homeowner version expired for systems bought after 2025. The business version didn't, so the value reaches your roof through a business that owns the system and passes it to you.
Is this a lease?
Technically, yes. It's a prepaid lease, which is exactly what lets the partner claim the credit for you. Unlike a regular lease, the payment never rises and it ends with you owning the system.
Can I still just buy it outright?
Yes. Cash and regular loans are always available, shown side by side. Just know buyers no longer get a federal credit, so you'd pay the full price.
Where is it available?
Twelve states today. Elsewhere, we show you the closest option.
- AZ
- CA
- CO
- FL
- HI
- ID
- MA
- NJ
- NY
- TX
- UT
- WA
See your Prepaid TPO price.
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Want the background first? Read how the federal credit changed.