Lease vs Buy: Solar in New York Compared

The real choice in front of most New York households is not solar or no solar. It is whether to own the equipment on the roof or to buy a service from the company that owns it.

That decision used to be dominated by tax, and it still is, but the arithmetic has flipped. The federal residential credit ended at the close of 2025, while the business-side credit available to a third-party owner did not. Every New York solar program that remains for homes — the state credit, the New York City abatement, the sales-tax exemption and the RPTL 487 property-tax exemption — now sits on top of that changed picture, and NY-Sun has no open block for homes as of September 2026. The RPTL 487 exemption is not automatic: file form RP-487 with your assessor by the taxable status date (March 1 in most towns; January 2 in Nassau towns; May 1 or June 1 in Westchester towns; set by charter in cities; usually January 1 in villages), and the system must be built before January 1, 2030 (RP-487 instructions).

What you are actually choosing between

Buying means acquiring an asset, with cash or with borrowed money, and taking on everything that comes with owning hardware: warranty administration, repairs outside warranty, roof coordination, and eventual replacement of the inverter.

Leasing means paying a fixed monthly amount for the use of equipment owned by someone else. A power purchase agreement is a close cousin in which the payment is tied to production rather than fixed, and that variant is covered separately in power purchase agreements for New York homeowners.

The distinction that carries through everything below is legal ownership. Incentives, repair duties, contract length and what happens at closing all follow from it.

The federal picture inverted at the end of 2025

The residential clean energy credit under Internal Revenue Code section 25D was terminated by the One Big Beautiful Bill Act, signed 4 July 2025, for expenditures made after 31 December 2025. An expenditure counts as made when the original installation is completed, so a system finished in December 2025 but switched on in January 2026 still falls under the old rules. A homeowner buying a system today receives nothing for it on their own federal return, with no phase-down and no transition provision.

A system whose installation was completed in 2025 was governed by the old rules, and unused credit from that year can generally be carried forward on the taxpayer’s own returns. That is a genuinely different situation and should not be read across to a purchase made now.

The business-side credit is separate legislation with its own rules and its own timetable, and it belongs to the company that owns a leased or PPA system. That is why some third-party offers can still price in a federal incentive: the incentive is real, but the homeowner never claims it and never sees it as a line on a tax return. In pure tax terms this now tilts toward third-party ownership and toward community solar, which is the opposite of the position most published guidance still describes.

What each New York solar program pays, and to whom

NY-Sun paid a per-watt incentive through the installer, not to the household, and stepped down as each regional megawatt block filled. It reduced the contract price on an owned system and the provider’s cost on a third-party-owned one. As of September 2026 NYSERDA has no open NY-Sun block for homes in any utility territory, so neither a purchase nor a lease on a home gets it now; check NYSERDA’s NY-Sun dashboard for a new one.

The New York State Solar Energy System Equipment Credit is claimed on Form IT-255. It is a percentage of qualified expenditure up to a statutory cap. Unusually, and unlike the former federal credit, New York’s rules can treat amounts paid under a qualifying written lease or power purchase agreement as qualified expenditure where the agreement runs for at least a minimum term. That makes the state credit a live question for lessees as well as buyers, and it is worth reading how the state equipment credit is calculated before assuming either way.

In New York City, the property tax abatement is filed with the Department of Buildings and applied against property tax liability in four annual instalments. Whether and how a third-party-owned system reaches that abatement is a filing question rather than an assumption, and it is set out further in the NYC solar property tax abatement. Statewide, Real Property Tax Law section 487 exempts the added assessed value of a qualifying system for a set period, subject to a municipality’s right to opt out.

Escalators are the main long-run difference

A purchase fixes the cost at the outset. Once a loan is paid off, the running cost of an owned system is maintenance and eventual component replacement, and nothing else.

Most leases and PPAs include an annual escalator, a fixed percentage by which the payment rises each year. A modest-sounding escalator compounds over a twenty-year term, and whether it stays below the utility’s own rate trajectory is unknowable at signing. Any proposal that presents that comparison as settled is presenting an assumption as a fact.

Some contracts are offered with no escalator at a higher starting rate. That version is easier to evaluate because only one number has to be judged rather than two.

Who carries the risk if the system underperforms

On an owned system, underproduction is the owner’s problem, mitigated by whatever the equipment and workmanship warranties actually say. Warranty terms differ sharply between manufacturers and installers, and the labour portion is often the shortest part.

On a lease or PPA, the provider owns the hardware and normally carries monitoring and repair duties, which is a genuine transfer of risk. The value of that transfer depends entirely on the provider still existing and still responding in year twelve, and on what the contract commits them to do rather than what the salesperson describes.

Production guarantees, where offered, are the mechanism that turns underperformance into a remedy. Read what the remedy is: a cash adjustment against a shortfall is not the same as a promise to fix anything.

Selling the house is where the two paths diverge most

An owned, paid-off system conveys with the property. An owned system with a loan behind it requires the lender’s filing to be released or the balance paid at closing, which is a scheduling task rather than a negotiation.

A leased or PPA system requires the contract to be assigned to the buyer, and the buyer usually has to meet the provider’s own credit requirements. If they will not or cannot take it on, the alternatives are prepaying the remaining term or paying for removal, and both are priced by the provider.

None of this makes a lease unsellable. It makes it a longer item in attorney review, which is why it belongs in the decision rather than being discovered later.

How the two compare on the points that matter

What tends to decide it in practice

Households with the capital and enough state tax liability to absorb the IT-255 credit generally still find ownership the cleaner arrangement, because it ends. The payments stop and the equipment stays.

Households without that capital face a narrower question than they used to. With the federal residential credit gone, a loan purchase no longer carries a second-year windfall to lean on, and the case for it rests on the state and local incentives alone. The detail of that is in how solar loans in New York work.

Households that expect to move within a few years, or that have limited state tax liability, are the ones for whom a third-party arrangement is most defensible on its own terms rather than as a fallback.

Frequently asked questions