Negotiating Purchase of Home With Solar PPA

[Jeremy Martin]

Hello folks,

I’m looking for some tips, not really on how to negotiate a number in this situation, but on how to handle the money if I reach an agreement with the seller.

I’m in escrow on a home that has 15 years left in a Solar PPA with Vivint Solar. I relied on vague information from the agents regarding the solar and didn’t do my due diligence in reading the solar contract until just before the end of our inspection period. So if we walk out of this deal, it’s my fault for losing the inspection/appraisal costs.

I do not want to assume the Seller’s solar lease (not sure why ANYONE would). In this case, the solar contract states the home owner must buy out of the lease, which I’ve calculated will cost about $30k plus tax.

To convince him to buy out, I’m considering offering to increase my purchase for the home by fair market value for a similar system, minus 30% for the Solar tax credit I will not get (Vivint got that), and minus depreciation (assumed at 5% per year for 5 years by now).

So if gave him about about $16k to “buy” the system with the house and own it... I understand that I cannot claim the solar tax credit, since the solar company already claimed that.

However, can I claim that this money went to home improvements in general, (by buying the solar system from for the house) so I can claim that on my taxes in any way? Or would the seller get to claim that when he buys it out?

Aside from being able to own the solar system, is there any other benefit I can recover from investing that money into the home purchase price? If so, would I have to keep that money separate from the “purchase price” of the home, and just give the guy a separate check?