Buying solar panels usually costs less over the life of the system, and you keep all of the savings. Leasing costs little or nothing up front, and the company handles repairs. But you keep paying for 20 years or more. In 2026 there is one more twist. Homeowners who buy can no longer claim the federal tax credit, while companies that own leased systems still may for a limited time.
Which option wins depends on your cash, your tax situation, your electricity rates and how long you plan to stay in the house. This guide compares the options as of October 2026 and shows how to run the numbers.
How buying, leasing and PPAs work
There are four common ways to get panels on your roof. Two make you the owner, and two leave a solar company as the owner.
| Option | Who owns the panels | What you pay | Who maintains them |
|---|---|---|---|
| Cash purchase | You | Full price at installation. | You, under the installer’s warranty. |
| Solar loan | You | Monthly loan payments plus interest. | You, under the installer’s warranty. |
| Lease | Solar company | A set monthly fee, often with a yearly increase. | Usually the company. |
| Power purchase agreement (PPA) | Solar company | A price per kilowatt-hour for the power the panels produce. | Usually the company. |
A lease and a PPA feel similar from the homeowner’s side. With a lease, you pay the same fee no matter how much power the panels make. With a PPA, your bill rises and falls with production. Some companies also sell prepaid leases, where you pay most of the contract up front in exchange for a lower total price.
Third-party ownership has become common again. According to Lawrence Berkeley National Laboratory’s 2026 distributed solar data update, third-party ownership of home systems rose sharply in 2024. It edged up again in 2025. The lab also found that lower-income households were more likely to choose this route, while cash and loans were more common among higher earners.
What the 2026 tax rules mean for each option
Until the end of 2025, homeowners who bought a system could take a 30% federal credit. That changed with the tax law signed on July 4, 2025 (Public Law 119-21). The IRS page on the Residential Clean Energy Credit says the credit is not available for property placed in service after December 31, 2025. The IRS counts the date installation is complete, not the date you paid.
Leased and PPA systems follow a different set of rules. The company that owns them claims a business credit under section 48E of the tax code. The same 2025 law ends that credit for solar property placed in service after December 31, 2027, if construction began after July 4, 2026. It also adds restrictions on components and owners tied to certain foreign entities.
The 2025 law also denies the business credit for some leased home equipment. However, the statute and the instructions for IRS Form 3468 point to solar water heaters and small wind turbines, not rooftop solar panels that make electricity.
In practice, a solar company may still claim a credit on a system it leases to you through 2027. You could not claim one if you bought the same system. Whether any of that saving reaches you depends on the contract price. Nothing requires a company to pass it on, so compare actual quotes rather than assuming a lease is cheaper.
Comparing the costs: a worked example
Real prices give a starting point. Berkeley Lab found that the median homeowner-owned system installed in 2025 was 7.7 kilowatts. Cash buyers paid a median of about $3.00 per watt, or roughly $23,100. Loan-financed systems came in near $4.50 per watt, about $34,700 before interest. The lab says loan fees rolled into the price may explain part of that gap. Our guide to solar panel costs in 2026 breaks those figures down further.
Lease prices vary widely, so here is a hypothetical quote to show the math. Say a company offers a 25-year lease at $150 a month with a 2.9% yearly increase, known as an escalator. Over 25 years the payments add up as follows.
| Option (hypothetical 7.7 kW system) | Up-front cost | Total paid over 25 years |
|---|---|---|
| Cash purchase at the 2025 median price | About $23,100 | About $23,100, plus any repairs. |
| Lease, $150 a month, no escalator | $0 | $45,000. |
| Lease, $150 a month, 2.9% yearly increase | $0 | About $64,800. |
The lease looks expensive next to cash, but that is not the full picture. A cash buyer gives up the return that $23,100 could have earned elsewhere. The owner also pays for repairs after warranties end, such as a replacement inverter. Still, in most cases the owner comes out ahead over 25 years, as long as they stay in the house.
The fair test is your own bill. Take the output the installer projects and multiply it by what your utility charges or credits per kilowatt-hour. Then compare that with each year’s lease payment. If the lease payment climbs faster than your power rates, your savings shrink over time. In the hypothetical above, the payment would reach about $194 a month in year 10 and $258 in year 20.
When leasing makes more sense
Leasing fits some households well. It tends to work best when:
- You do not have the cash for a purchase and do not want to take on a loan.
- You would rather not deal with monitoring, repairs or insurance claims for the panels.
- The lease price is clearly below what you pay the utility now, even after escalators.
- You value predictable payments more than the largest possible long-term saving.
The trade-off is control. You do not own the equipment, and you cannot sell or claim any renewable energy certificates it creates. Ending a lease early can also be hard and costly, according to the FTC’s consumer guide to home solar.
When buying makes more sense
Buying usually wins if you can pay cash or get a low loan rate, and you plan to stay at least 10 years. Once the system is paid off, the power it makes is close to free for the rest of its life. The FTC notes that home systems are designed to last at least 20 years, so the later years are where owners gain the most.
Ownership also keeps your options open. You can add a battery, change installers or sell the house with the panels as a plain feature. For a fuller look at payback periods and who benefits most, read our guide on whether solar panels are worth it.
The downside is risk. If the system underperforms after warranties expire, or if your utility cuts what it pays for exported power, the owner absorbs the loss. In California, for example, new customers have received lower credits for exported power since the state’s net billing tariff replaced net metering in April 2023.
Selling a home with solar panels
Owned panels usually transfer with the house like any other fixture. Leased panels need more steps. The buyer typically has to agree to take over the contract. Some companies also require a credit check or a transfer fee. If the buyer refuses, you may have to buy out the lease or pay to move the system.
That said, leased systems are not always a problem. The Department of Energy’s homeowner’s guide to solar says research found third-party-owned systems had mostly neutral effects on sale price and time on the market. Owned systems, by contrast, have been linked to higher sale prices.
Questions to ask before you sign
- What is the yearly escalator, and what will the payment be in year 10 and year 20?
- Does the contract guarantee a minimum amount of power, and what happens if the panels fall short?
- What are the options at the end of the term: renewal, purchase or removal, and at what cost?
- Who pays to remove and reinstall the panels if the roof needs work?
- How does the contract transfer if you sell the house?
- Is the installer licensed in your state? In California, you can check a contractor on the Contractors State License Board site.
Get at least two or three quotes, and compare cash, loan and lease prices for the same system. Do not sign on the day of a sales visit. For more energy and technology explainers, see our science and technology guides. This article explains general costs and is not financial advice.
Frequently asked questions
Is it better to lease or buy solar panels?
Buying usually saves more over 25 years if you can pay cash or borrow cheaply and plan to stay. Leasing suits people who want little up-front cost and no maintenance duties.
Can I get the federal solar tax credit if I lease?
No. Only the owner can claim a credit, and the homeowner credit ended for systems installed after 2025. The leasing company may claim a business credit through 2027.
Can I buy out a solar lease?
Often, yes. Many leases include a buyout option at set points or when you sell the house. Check the contract for the price and timing.
Do leased solar panels hurt home resale?
Not necessarily. Research cited by the Department of Energy found mostly neutral effects, but the buyer must agree to take over the lease.
Have a question about this topic? Ask in the comments below. Our editors read every comment and answer questions here, and we add useful answers to the guide.
Sources
- irs.gov/credits-deductions/residential-clean-energy-credit
- irs.gov/newsroom/faqs-for-modification-of-sections-25c-25d-25e-3…
- irs.gov/instructions/i3468
- govinfo.gov/content/pkg/PLAW-119publ21/html/PLAW-119publ21.htm
- law.cornell.edu/uscode/text/26/25D
- eta-publications.lbl.gov/publications/us-distributed-solar-and-storage-0
- consumer.ftc.gov/articles/solar-power-your-home
- energy.gov/cmei/systems/homeowners-guide-solar
- cpuc.ca.gov/industries-and-topics/electrical-energy/demand-side-mana…