The solar energy equipment tax exemption gives residential and commercial property owners the right to receive a credit against the real estate assessed value of their property for certain qualifying solar energy equipment/systems.

Property owners can qualify for a tax exemption for the installation of solar equipment that is designed and used primarily for the purpose of providing for the collection and use of solar energy for water heating, space heating or cooling or other applications which would otherwise require a conventional source of energy. Qualifying solar energy systems include passive solar space heat, active solar water heat, active solar space heat, thermal electricity, and photovoltaics.

• The program is authorized and controlled by the Code of Virginia, § 58.1-3661, the Virginia Administrative Code 13 VAC 5-200, and City Code Chapter 90, Article II, Division 5.
• The tax exemption program is effective as of January 1, 2022, with qualifying exemptions/credits commencing with the January 1, 2023 tax year. Any solar energy system installations completed prior to January 1, 2022 are not eligible for this program.
• The tax exemption program is open to both residential and commercial property owners.
• Qualifying equipment or system installations will entitle the property owner to a tax exemption for 10 years.
• There is no cost to apply for the tax exemption.

In order to qualify for the tax exemption, property owners must provide the following:

• A completed application for Solar Energy Equipment, Facilities or Devices Certification for Real Property Tax Exemption.
• A copy of the plans, specifications, and drawings of the solar energy equipment, facilities or devices for which certification is requested.
• A brief narrative description of the function of the solar energy equipment, facilities or devices. Include in the narrative the rated capacity of installation, intended performance levels, and estimated energy and cost savings.
• The cost of the installed solar energy equipment, facilities or devices (materials and labor) and documentation of such costs. Items such as receipts, cancelled checks, or contracts for equipment installation shall be considered as documented cost data for the purposes of calculating the tax exemption.
• Permit applications as required under the Virginia Uniform Statewide Building Code (USBC) for the installation of the solar energy equipment, facilities or devices. For solar photovoltaic systems, see the Solar Photovoltaic System Permitting and Installation Checklist for more information.

• Participate in the tax exemption program by submitting the appropriate applications for permits, the application for Solar Energy Equipment, Facilities or Devices Certification for Real Property Tax Exemption, and the required documentation and supporting material as described above to CodeAdministration@fairfava.gov.
• Once the equipment is installed and all required inspections are approved for conformance with the Virginia Uniform Statewide Building Code, the Code Administration Office shall transmit the certified application to the Real Estate Assessment Office.
• The Real Estate Office will review the application and calculate the value of the tax exemption pursuant to § 58.1-3661 of the Code of Virginia and the City Code Chapter 90, Article II, Division 5.
• The Real Estate Assessment Office will issue a separate letter to the applicant to explain the calculation of the value of the tax credit and the time period for which the tax credit will apply.

The property owner has entered into a contract for a total of $20,000 to install a solar photovoltaic system ($14,000 in solar energy equipment and $6,000 for installation). The Code Administration Office has completed their inspections and certified the application to the Real Estate Assessment Office.

The $20,000 in this example is considered the value of the exemption.  

The percentage or formula used is outlined in the Virginia Administrative Code. Many items such as solar photovoltaic systems (solar panels) or hot water systems are at 100% of cost and installation as shown in this example. Other items such as south facing windows and greenhouses are based on a percentage or formula as stated in the code.

Based on the calendar year 2021 tax rate of $1.075 per $100 of assessed value, the $20,000 exemption value would equal a tax savings of $215 for the tax year. This is calculated as follows: $20,000 divided by 100 multiplied by $1.075 = $215. The amount of tax savings over the 10-year period may vary depending on the tax rate that is in effect for each tax year.

The $20,000 exemption value will be converted to a tax credit and deducted from the property's tax bill every year for 10 years.

For questions about the application, what equipment qualifies, the permit process, or inspections, please contact the Code Administration Office (email, 703-385-7830). For questions about the tax exemption calculation, please contact the Real Estate Assessment Office (email, 703-385-7840).