Can I claim the federal tax credit if I lease my solar panels?

No. With a lease or power purchase agreement (PPA), the leasing company owns the system and claims the federal tax credit itself, not you. Only owners — whether cash buyers or loan holders — can claim the 30% federal credit directly.

Is a solar loan the same as a home equity loan?

Not necessarily. Many solar loans are unsecured or secured specifically against the solar equipment, separate from a home equity loan or HELOC, though some homeowners do choose to finance solar through a HELOC because of potentially lower interest rates. Compare terms carefully, since they affect your total cost.

What happens to a lease or PPA when I sell my house?

The lease or PPA contract typically needs to be transferred to the new homeowner, which can complicate a home sale if the buyer is not comfortable taking over the agreement. This is one of the most commonly cited drawbacks of leases and PPAs compared to ownership.

Solar Financing Options: Cash, Loan, Lease, or PPA

How you pay for solar changes your total cost, who gets the tax credit, and what happens if you sell your home. Here’s how the four common options actually compare.

Cash purchase

You pay the full cost upfront and own the system outright.

You claim the federal tax credit (and any state incentives) directly.
No financing costs — the total cost is the lowest of any option over the life of the system.
Highest upfront cost, which is the main barrier for many homeowners.
Best long-term value if you have the capital and plan to stay in the home.

Solar loan

You borrow to cover the cost and own the system, same as a cash purchase, but you make monthly payments with interest.

You still claim the federal tax credit — ownership is what matters for tax credit eligibility, not how you paid.
Monthly payment is often designed to be close to or less than your old electric bill, though this depends on loan terms and your usage.
Total cost is higher than cash due to interest, but you avoid a large upfront payment.
Loan terms vary widely — compare interest rates, term length, and whether there’s a prepayment penalty.

Solar lease

A third-party company owns the system, installs it on your roof, and you pay a fixed monthly fee to use the electricity it produces.

You do not claim the federal tax credit — the leasing company owns the system and keeps that benefit.
Little to no upfront cost, which is the main appeal.
Savings are generally smaller than ownership, since the leasing company’s profit and financing costs are built into your payment.
Can complicate a home sale, since the lease must be transferred or bought out.

Power Purchase Agreement (PPA)

Similar to a lease, but instead of a fixed monthly fee, you pay for the electricity the system actually produces, usually at a rate lower than your utility’s.

You do not claim the federal tax credit, same as a lease.
Payment varies with production rather than being a flat fee.
Often includes an escalator clause — a scheduled annual increase in the rate you pay — which is important to read closely.
Same resale complications as a lease.

Side-by-side comparison

	Cash	Loan	Lease	PPA
You own the system	Yes	Yes	No	No
You get the federal tax credit	Yes	Yes	No	No
Upfront cost	Highest	Low/none	None	None
Total lifetime cost	Lowest	Moderate	Higher	Higher
Affects home sale	Minimal	Minimal	Complicates	Complicates

Which one fits your situation

Cash makes sense if you have the capital and want maximum savings and the tax credit.
A loan is a good middle ground if you want ownership and the tax credit but don’t want to pay upfront — just compare interest rates and terms across a few lenders.
A lease or PPA can make sense if you want to avoid any upfront cost and don’t expect to move soon, but understand you’re trading the tax credit and long-term savings for convenience.

Whichever option you’re considering, run the numbers through our solar calculator to see the estimated system size and cost for your situation, and read our guide on is solar worth it to think through the return on investment before signing anything.