What Homeowners Need to Know Before January 1, 2027
For 25 years, installing solar in California didn't raise your property taxes. That protection is ending, and the deadline that matters is closer than most homeowners realize.
What's changing
Under existing law, California's Active Solar Energy Systems Exclusion (which keeps a new solar or battery system from triggering a property tax reassessment) sunsets on January 1, 2027. After that date, installing solar means the system's added value gets folded into your property tax bill, permanently, for as long as you own the home.
Only the value of the solar system itself is assessed, not your whole home. The county assessor identifies that there's a system to value because the permit is on file. That's literally how they find out it exists.
There's no single statewide methodology assessors are required to use, and how you're notified isn't standardized either. In practice, expect one of three approaches:
- Cost approach. What it actually cost to build the system, assessed once, then depreciated over time with an inflation factor capped at 2% annually (the same cap that applies to other property under Prop 13). The assessed value is generally the replacement cost after subsidies and tax credits are subtracted, not the sticker price.
- Income approach. The discounted value of the future electricity savings or revenue the system is expected to generate.
- Comparable sales approach. What similar homes with solar have recently sold for, compared to those without.
Different counties may lean on different methods, and your effective rate depends on where you live. The statewide base is 1.1%, but cities and counties layer on their own additional assessments, so your real number could be higher.
If you went solar through a lease or PPA, pay attention here
If you have a third party owned (TPO) system, a lease or power purchase agreement rather than owning the panels outright, the TPO owner, not you, would be on the hook for the increased tax. There's also discussion that the Board of Equalization may require TPO ownership to be identified directly on permits going forward. That would make a cleaner administrative process, but it doesn't change who pays. If you own your system outright, the new tax liability is yours.
Why the timing matters
None of this is a one time fee. An added assessment is an annual increase to your property tax bill (that will likely depreciate with the value of the solar system) for as long as you own the home. Over a 20 or 25 year ownership horizon, that can affect the financial benefits for solar.
What homeowners need to do to be grandfathered in
The trigger event is passing final inspection, the point after your system is fully built and when the building department physically signs off on the completed work. If your system passes final inspection before January 1, 2027, it's grandfathered under the old property tax rules. If it passes on or after that date, the new system's value gets added to your assessment.
This is a later milestone than most people assume. Final inspection can't happen until the system is completely built and wired, which means design, permitting, construction, and inspection all have to be finished with real margin left over. A homeowner who signs a contract in November 2026 is almost certainly too late. There isn't enough runway to complete each stage in six weeks.
Get started now
If you've been weighing solar or battery storage, the math just picked up a time sensitive variable it didn't have a year ago. The homeowners who beat the deadline will be the ones who started the process months out, not weeks out.
Sun Light & Power is filling our schedule for 2026. If you want your system grandfathered under the current property tax rules, contact us for a site assessment and a realistic timeline based on your county's current permitting and inspection turnaround.
