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Volume 8 - Opinions of Counsel SBEA No. 92

Opinions of Counsel index

Solar or wind energy systems exemption (computation) (pool enclosure) - Real Property Tax Law, § 487:

An enclosure for a swimming pool, which includes both active and passive solar features, may qualify for a partial exemption from taxation.

A property owner constructed a 20′ x 40′ inground swimming pool and enclosed the pool in a 44′ x 80′ addition to his residence. The living area of the residence itself is 2,470 square feet. The pool enclosure encompasses 3,520 square feet. The property owner filed an application for the solar energy exemption (Real Property Tax Law, § 487). The property now contains both active and passive solar features. The issue is the amount of exemption this property may be entitled to pursuant to RPTL, § 487.

Section 487 of the Real Property Tax Law provides that real property which includes a solar or wind energy system satisfying the guidelines established by the Commissioner of the Energy Office (and satisfying the other provisions of section 487), shall be exempt from taxation to the extent of any increase in value by reason of the inclusion of the solar or wind energy system for a period of fifteen years. Since the enactment of section 487, both assessors and taxpayers have raised the question whether it provides a full exemption from taxation for solar energy systems. While such an interpretation may be acceptable in regard to the value of most active forms of solar energy systems which have no other use (e.g., roof panels), such an interpretation creates problems with respect to passive energy systems such as sunspaces or solar greenhouses.

The distinction is based on the possible dual use of the sunspace or greenhouse. In 6 Op.Counsel SBEA No. 122, discussing solar greenhouses, we noted that the statute itself provides that components serving dual functions (i.e., as part of the building’s structure as well. as part of the solar energy system) are to be considered solar equipment in the amount the cost of the components is increased to enable them to be used as part of the solar system. To read the statute otherwise would result in the incongruous situation where a solar energy addition exceeding the size of the existing structure (such as has been constructed by the owners of this property) could be constructed and a total exemption could be claimed on the addition. We do not believe the Legislature intended to fully exempt such additions.

Consequently, it is our opinion that the measure of a solar energy exemption for passive solar systems is the difference in the value of the structure as improved by the solar addition less the hypothetical value of the structure with a conventional addition (i.e., non-solar) of equal size. We suggest that assessors consider the additional cost factors associated with passive solar structures in arriving at their valuation for exemption purposes, and also give due consideration to the anticipated effectiveness of such system in energy savings, to the extent that reliable data is available. If these factors indicate an increase in assessed value over and above the value which would be added to the structure by a conventional addition of the same size, the applicant is entitled to an exemption pursuant to section 487 in that amount.

March 10, 1986