Are Solar Panels Considered Real Property Or Personal Property

The unintended consequences this homeowner faced is the loan may come with a uniform commercial code ucc filing that identifies the solar system as personal property the system cannot be included in market value if it is personal property.

Are solar panels considered real property or personal property.

Paragraph b of this section defines real property which includes land as defined under paragraph c of this section and improvements to land as defined under paragraph d of this section. Accordingly the 36 series of endorsements includes coverage for those non real property improvements. This section provides definitions for purposes of part ii subchapter m chapter 1 of the internal revenue code. Many appraisers are taking the position that there is no added value and perhaps some diminished value with leased solar panels because the buyer must assume the lease.

Business property remains personal property even where the equipment is affixed to the land or building. Improvements to land include inherently permanent structures as defined. In michigan residential personal property is not subject to property taxation. This additional financial commitment makes it harder to market and sell the property.

In february the state tax commission issued a memo classifying solar panels as residential real property that would likely increase property taxes. Financed panels as personal property may not provide contributory value of the solar panels towards the. Conversely solar modules themselves are often easily removed with the intention of periodic replacement possibly resulting in a personal property classification. Removing the ucc filing means paying off the loan at closing.

February 15 2018 in property tax by david nykanen with the increasing popularity of residential solar panels the issue of whether these panels are classified as real or personal property has been the subject of some discussion debate and litigation. Most states applying the three part test have found that solar panels wind turbines and. Solar energy systems are likely ineligible for the recent property tax exemption made available to eligible manufacturing property because eligible manufacturing personal property specifically excludes personal property used in the generation transmission or distribution of electricity for sale mcl 211 9m 7 c. Since then the michigan tax tribunal and state tax commission have issued varying opinions on whether solar should be considered real or personal property.

For a solar farm much of the value of the project relies not on the value of the land itself but rather on improvements affixed to the property the solar panels and affiliated infrastructure that do not constitute real property.