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Solar Energy System New Construction Exclusion

The active solar exclusion will remain in effect until January 1, 2025, unless extended by legislative action.  Active solar energy systems that qualified for the new construction exclusion prior to January 1, 2017 will continue to be excluded after that date, until there is a subsequent change in ownership. 

The addition of an active solar energy system to an existing structure is excluded from property tax assessment under Revenue and Tax code section 73, which defines the term 'active solar energy system' as any system that uses solar devices which are thermally isolated from living space or any other area where the energy is used, to provide for the collection, storage, or distribution of solar energy.

Active solar energy systems may be used for any of the following: (a) domestic, recreational, therapeutic, or service water heating; (b) space conditioning; (c) production of electricity; (d) process heat, (e) solar mechanical energy.

Pipes, ducts, tanks, and other auxiliary equipment used in a solar energy system that also carry or use energy from sources other than solar energy are assessable at 75% of their market value. Excluded from this benefit are solar swimming pool heaters, hot tub heaters, passive energy systems and wind energy systems.

As of September 2008, this exclusion was modified further to include the construction of an active solar energy system in a new building where: 

  • Owner-builder incorporates an active solar energy system in the initial construction of the new building.
  •  does not intend to occupy or use the new building.

The exclusion from “new construction” provided by this subdivision also applies to the initial purchaser who purchases the new building from the owner-builder, but only if: 

  • Owner-builder did not receive an exclusion under this section for the same active solar energy system and 
  • Initial purchaser purchased the new building prior to that building becoming subject to reassessment to the owner builder.

The initial purchaser must file a claim with the Assessor and provide any documents necessary to identify the value attributable to the active solar energy system included in the purchase price of the new building. The claim shall also identify the amount of any rebate for the active solar energy system provided to either the owner-builder or the initial purchaser.

Initial Purchaser Claim For Solar Energy System New Construction Exclusion

Active Solar Energy Systems are NOT excluded from reassessment when property changes ownership after the initial purchase.

This program remains in effect until January 1, 2025. An application for this exclusion must be filed with the Assessor. If you have further questions you may call our office at (530) 749-7820.