With the California solar property tax 2027 deadline approaching, homeowners considering solar may be wondering whether a new system could increase their property taxes.
Under current California law, qualifying solar installations are excluded from increasing your home’s assessed value. However, that exclusion is scheduled to become inoperative on January 1, 2027.
The short version:
- If you already have a qualifying solar system, the exclusion is not taken away just because the law changes in 2027.
- A system completed before January 1, 2027 may still qualify for the current exclusion.
- If a new system is installed after the change, it would not automatically be added to your property assessment at the full purchase price, but it may be assessed under the rules in effect at that time.
What is the current solar property tax exclusion in California?
California uses a new construction exclusion for qualifying active solar energy systems. Although people often call it the “solar property tax exemption California,” the California State Board of Equalization, BOE, explains that it is technically an exclusion, not an exemption.
Under Revenue and Taxation Code section 73, the construction or addition of a qualifying active solar energy system is not treated as “newly constructed” for property tax purposes. In practical terms, the installation is not assessed as new construction, so it does not increase the home’s existing assessed value.
That is different from saying the solar system has no value. It means the value of the qualifying system is excluded from the property tax assessment.
The exclusion can cover equipment used to produce solar electricity, including:
- Solar collection equipment
- Storage devices used in solar electricity production
- Power conditioning equipment
- Transfer equipment used in solar electricity production
The BOE defines active solar energy systems more broadly than rooftop photovoltaic panels alone. Qualifying systems may collect, store or distribute solar energy for electricity, water heating, space conditioning, process heat or mechanical energy.
However, solar swimming pool heaters and hot tub heaters do not qualify for this exclusion. Passive energy systems and wind energy systems are also not included.
The exclusion is not limited to California residents. It applies based on the property and the qualifying system, not the homeowner’s residency.
For an owner who adds solar to a home they already own, the homeowner generally does not need to file a separate form to claim the exclusion. The county assessor typically learns about the installation through the building permit process.
You can review the BOE’s Active Solar Energy System Exclusion page and its frequently asked questions for the agency’s explanation.
California solar property tax 2027: what changes on January 1?
The current exclusion has been extended several times since it was created following Proposition 7 in 1980. Under current law, the exclusion is available through December 31, 2026, and is scheduled to change on January 1, 2027.
That change comes from Senate Bill 710, which revised the legal wording so section 73 becomes inoperative on January 1, 2027, rather than being repealed. That is a technical change to the sunset language, not an extension.
In general, systems that qualify for the section 73 exclusion before January 1, 2027, remain excluded until a subsequent change in ownership of the property.
After section 73 becomes inoperative, new installations may be assessable under the property tax rules in effect at that time. As of September 2026, no extension of the broad exclusion has been enacted, and Assembly Bill 2389 was held under submission in May 2026.
The BOE’s Letter to Assessors No. 2026/034 explains the change from “repealed” to “inoperative” and the related transition rules.
Will existing solar owners see their property taxes increase?
Generally, no. Qualifying systems are not retroactively taxed simply because section 73 becomes inoperative.
The BOE states that an active solar energy system that qualified for the exclusion before January 1, 2027, remains excluded on and after that date until there is a subsequent change in ownership.
In plain English, if you already own a home with a qualifying system that received the exclusion, the 2027 change does not cause that system to be added back to your assessment. You keep the benefit for as long as you own the home, subject to the specific rules that apply to your property.
A later sale of the home may trigger a broader reassessment under California property tax rules. That is a separate issue from the 2027 sunset of the solar exclusion, and homeowners should consult their county assessor about how a change in ownership would affect their property.
Does signing a solar contract before 2027 protect you?
No. Signing a contract, paying a deposit or receiving financing approval does not by itself create a property tax exclusion.
The relevant issue is the timing of assessment and whether the system qualifies under the law.
Completed new construction is generally subject to a supplemental assessment on the date of completion. Construction in progress is generally considered on the lien date, which is January 1.
That means a contract signed in 2026 does not guarantee that a project will receive the current exclusion if the qualifying construction is not completed or otherwise eligible under the BOE’s rules.
This is one reason homeowners should avoid making a solar decision based only on a perceived deadline. A realistic project timeline matters more than the date on a contract.
A reputable contractor should explain the design, permitting, utility and inspection steps clearly, including which parts of the project may affect the completion timeline.
What if construction begins in 2026 but finishes in 2027?
This is where the timing becomes more complicated. The BOE’s guidance in LTA 2024/031 distinguishes between completed construction and construction in progress.
The general homeowner-friendly summary is:
- A qualifying solar system completed before January 1, 2027, may qualify for the exclusion.
- Construction in progress is assessed on the January 1 lien date, and only work physically in place as of 12:01 a.m. on January 1, 2026 may qualify under the BOE’s transition rules.
- Solar construction added during 2026 that is still unfinished on January 1, 2027 is generally not excludable as construction in progress.
These rules can be difficult to apply to a particular project. The county assessor administers property tax assessments, so homeowners with a project that crosses the 2026–2027 boundary should ask their assessor about the specific construction timeline.
Will the property taxes increase by the full solar purchase price?
No. Homeowners should not assume that an assessable solar installation will increase the property’s assessed value by the full contract price.
If an installation is assessable as new construction, the county assessor determines the value attributable to the system under standard new-construction assessment rules. That value is then added to the property’s base year value.
The assessment is not automatically equal to the amount paid to the contractor.
The actual result depends on the facts of the property, the system and the applicable assessment rules. A county assessor is the right source for a property-specific answer.
How could the change affect a homeowner considering solar in 2026?
If you’re considering installing solar this year, the property tax change is worth understanding, but it shouldn’t be the only factor in your decision.
A few practical points are worth keeping in mind:
- A qualifying system completed before January 1, 2027, may receive the current exclusion.
- A system that qualified before that date generally remains excluded for as long as you own the property.
- A new installation after section 73 becomes inoperative may be assessable under then-current law.
- Any assessable value would be determined by the county assessor, not automatically set at the system’s full purchase price.
- Solar decisions should also consider your electric usage, utility rate plan, roof condition, system design, battery goals, financing terms and expected energy production.
The property tax exclusion is also separate from the federal residential clean energy tax credit. That federal income tax credit expired for qualifying expenditures after December 31, 2025. Property tax treatment and federal income tax treatment are different issues, so speak with a qualified tax professional about your situation.
Frequently asked questions
What if I’m buying a newly built home with solar?
Eligible buyers of newly constructed homes with qualifying solar systems may be able to claim the exclusion. Beginning January 1, 2027, initial purchasers generally have three years from the purchase date to file the required claim. Check with your county assessor to confirm eligibility and filing requirements.
How California Renewable Energy can help
At California Renewable Energy (CARE), we help homeowners understand the full project rather than focusing on one rule or incentive. Our solar installation service includes design, permits, HOA approvals, utility interconnection and inspections.
If you’re considering solar in Granite Bay, El Dorado Hills, Cameron Park, or another community within our service area, California Renewable Energy (CARE) can help you understand your options, the installation process, and the timeline involved. We provide clear, fixed-price proposals so you know what to expect before making a decision.
If you are considering solar for your home, you are welcome to schedule a no-obligation solar evaluation with California Renewable Energy (CARE). We can review your property, explain the likely timeline and help you understand how solar may fit your energy goals without using pressure or promising a specific tax result.
This article provides general educational information and is not tax or legal advice. California property tax assessments are administered by county assessors. Confirm your specific situation with your county assessor and a qualified tax professional.