Solar Lease vs PPA vs Buy After July 6, 2026: A Homeowner's Decision Guide

The July 6, 2026 deadline has passed. If you're a homeowner evaluating solar right now, your financing choice matters more than ever. The 30% federal credit is gone for cash and loan buyers — the Section 25D Residential Clean Energy Credit expired December 31, 2025, and the Section 48E construction-start window closed July 6, 2026. But that same 30% is still reachable if you lease or sign a Power Purchase Agreement (PPA), because the installer claims 48E and passes the value to you.

This guide walks you through the decision step by step. No jargon, just what you need to know and do: which option wins when, how the 48E passthrough actually reaches you, the questions to ask every installer, and the red flags that should stop you from signing.

Step 1: Understand What Changed

Two deadlines reshaped residential solar financing. First, the Section 25D Residential Clean Energy Credit expired on December 31, 2025 — there is no longer a personal federal credit for a system you buy and own for your primary residence. Second, the Section 48E construction-start deadline was July 6, 2026 (the statutory date was July 4, a Saturday, which rolled to Monday, July 6 under IRC 7503). That deadline has now passed for new projects.

But 48E itself did not disappear. It remains a 30% commercial credit claimed by the system owner — and for a lease or PPA, the system owner is the installer or developer, not you. That means third-party-owned systems can still capture 30%, and a competitive installer embeds that value in your financing terms. For the full market breakdown of what changed on July 6, read our Post-48E Market Reality guide. For exactly how the 48E mechanism flows value to a homeowner, see Section 48E Pass-Through.

Step 2: Compare Your Three Options

The core decision is between cash/loan ownership, a solar lease, and a PPA. Here's how they stack up in the post-48E market:

Buying wins when: you live in a high-electricity-rate state (California, the Northeast), you plan to stay in the home for 10 or more years, and you have the cash or can secure a low-rate loan. Even without the federal credit, ownership builds equity and the system eventually pays for itself. In high-rate states, the avoided utility cost alone can clear payback within a panel's 25-year warranty.

Leasing wins when: you want predictable monthly costs, $0 down, and no maintenance responsibility. The 48E passthrough makes a lease the cheapest monthly option for many mid-bill homeowners — you capture the credit's value indirectly, without needing tax liability to use it. The trade-off is the escalator and the lack of home-equity upside.

A PPA wins when: you want to pay only for what the system actually produces, you prefer flexibility, and you live in a state with good sun hours. Watch the escalator and the per-kWh rate carefully — a low starting rate that escalates 3% a year can overtake your utility rate late in the term.

Step 3: Understand the 48E Passthrough

The installer claims the 30% Section 48E credit on a system they own on your roof, and embeds the value of that credit in your lease or PPA terms. You never file anything — the benefit shows up as lower payments than you'd see in a world with no credit. For a sample ~8 kW system, that can mean a lease payment of ~$150/month instead of ~$185, or a PPA rate of ~$0.14/kWh instead of ~$0.17, because the installer captured 48E.

The catch: installers have no obligation to pass through the full credit. Many keep a large share as margin, and some pass through none at all — charging you the no-credit price while pocketing the 30% themselves. The only way to know what you're getting is to ask. Our 48E Passthrough Guide breaks down the three passthrough patterns (Aggressive, Partial, None) and the installer language that reveals each.

Step 4: Run Your Numbers

Don't guess. The single biggest mistake homeowners make post-48E is deciding on financing without modeling both paths over the full term. These tools do the math with the 48E analysis built in:

• Financing Comparison — model all four paths (cash, loan, lease, PPA) over 25 years, with the 48E passthrough analyzed for third-party-owned systems.
• Solar Lease vs Buy Calculator — see 25-year total costs, the break-even year, and who actually gets the credit.
• PPA Contract Decoder — if you already have a PPA quote, decode it for escalator, buyout, and red-flag terms.
• PPA Rate Benchmark — compare your quoted per-kWh rate against state averages to see if the passthrough is real.

Step 5: Questions to Ask Every Installer

Before you sign anything, get answers to these. If an installer can't or won't answer, that alone is enough to walk away:

1. 1. Are you claiming Section 48E on this system? (If they can't answer, walk away.)
2. 2. What percentage of the 48E credit is reflected in my quoted price?
3. 3. Is my payment fixed, or does it escalate? What's the escalator rate?
4. 4. What happens at the end of the term — buyout price, renewal, or removal?
5. 5. Is there a dealer fee embedded in the financing?
6. 6. What's the system's estimated production versus my actual usage?
7. 7. Can you provide the construction-start documentation? (Verify it's pre-July 6 if they claim 48E.)

The passthrough patterns behind these questions are explained in depth in the 48E Passthrough Guide.

Step 6: Red Flags That Should Stop You

In the post-48E market, the riskiest deals are the ones that quietly strip the credit value out of your financing while looking cheap on the surface. Watch for:

• ⚠ A lease/PPA quote that's MORE expensive than a cash purchase would be (no passthrough of the credit value).
• ⚠ An escalator above 3% per year — that compounds into a much larger bill by year 15.
• ⚠ A fair-market-value (FMV) buyout trap, where the end-of-term buyout price is set at an inflated estimate.
• ⚠ No clear answer on whether the 48E credit passthrough is reflected in your price.
• ⚠ Pressure to sign before you've had time to compare competing offers.
• ⚠ "30% tax credit" language applied to a cash or loan quote — that credit no longer exists for new owned residential systems, and subtracting it is a misrepresentation of the deal.

If you have multiple quotes, run them through the Solar Quote Comparison tool to spot deals that misuse the expired credit, and use the PPA Contract Decoder to catch escalator and buyout traps in any lease or PPA contract.

Frequently Asked Questions

Can I still get the 30% solar tax credit if I lease?

Yes. When you lease or sign a PPA, the installer owns the system and claims the 30% Section 48E commercial credit. They embed that value in your lease payment or PPA rate, so you receive the benefit indirectly through lower monthly costs. You never file anything related to the credit yourself — the 30% shows up in your bill.

Is a solar lease or PPA better than buying in 2026?

It depends on your goals. Buying with cash or a loan no longer carries a federal credit (Section 25D expired December 31, 2025), which weakened the economics of ownership for many homeowners. A lease or PPA restores access to the 30% value via the 48E pass-through, usually with $0 down and a predictable monthly cost. Buying can still win in high-electricity-rate states (California, the Northeast) if you plan to stay 10+ years and value long-term ownership and home equity.

What is the 48E passthrough and how do I know I'm getting it?

The 48E passthrough is the value of the 30% commercial credit the installer claims and embeds in your financing terms. You know you're getting it when your lease payment or per-kWh PPA rate is meaningfully lower than the retail equivalent with no credit. The only reliable way to confirm it is to ask directly: “What percentage of the 48E credit is reflected in my quoted price?” A transparent installer will answer with a number; an evasive one is a red flag.

What happens at the end of a solar lease or PPA term?

Typically three options: renew the agreement at a (possibly higher) rate, buy out the system at a pre-negotiated or fair-market-value price, or have it removed (sometimes at no cost, sometimes for a removal fee). The specific terms are set in your contract. Read the end-of-term clause carefully before signing — the fair-market-value buyout, in particular, can be an expensive surprise.

Can I buy out my lease early, and should I?

Most leases allow an early buyout, but the price is often set near "fair market value," which may exceed the residual value you'd actually receive from the system's production. Early buyout rarely makes pure economic sense unless you are selling the home and the buyer refuses to assume the lease. Run the numbers in the Financing Comparison tool before deciding.

Does leasing solar increase my property taxes?

In most states, leased systems are treated differently than owned systems. Because you do not own a leased system, the solar property-tax exemption that applies to owned systems may not apply — but leased systems typically do not add to your home's assessed value either, since they are not your asset. Rules vary by state and municipality; check your state's treatment with the Incentive Finder.

What's the difference between a solar lease and a PPA?

A lease charges a fixed monthly payment regardless of how much electricity the system actually produces. A PPA charges you per kilowatt-hour of electricity the system generates. Both are third-party-owned (the installer owns the equipment), both can carry the 48E passthrough, and both typically require $0 down. The lease favors predictable costs; the PPA favors paying only for what you produce.

How do I compare multiple lease/PPA offers?

Normalize every offer to the same system size and production estimate, then compare four things: the monthly payment (lease) or per-kWh rate (PPA), the annual escalator, the end-of-term options, and whether the 48E passthrough is actually reflected in the price. The Financing Comparison and Solar Quote Comparison tools do this side by side so you can spot the best deal and the red flags.

The July 6, 2026 deadline changed which financing path wins, but it did not end solar's value. For most homeowners in 2026, the practical route to the 30% now runs through a lease or PPA, where the installer claims 48E and you collect the value every month in a lower bill. The homeowners who win are the ones who price both paths honestly, ask the passthrough question, and walk away from any deal that can't answer it.