For most Canadian homeowners, installing solar panels, a heat pump or a battery on their own home has fairly simple tax implications: you pay sales tax on the purchase, there's generally no federal income tax credit for the equipment, and offsetting your own electricity use usually isn't treated as income. Things get more complicated if you rent the property out, run a business from it, or sell electricity under a contract — that's when it's worth talking to a tax professional.
Key takeaways
- Expect to pay GST/HST (and PST where applicable) on equipment and installation, though some provinces exempt certain efficiency equipment from provincial sales tax.
- Canada's large clean technology investment tax credits are aimed at businesses, not households.
- Net metering credits that simply reduce your own bill generally aren't treated like business income, but selling power under a contract can be.
- Landlords and businesses may be able to deduct clean energy equipment over time through capital cost allowance.
- This article is general education, not tax advice — confirm your situation with the Canada Revenue Agency or a qualified professional.
Sales tax on renewable equipment
When you buy a solar array, heat pump or battery for your home, sales tax applies the same way it does for most purchases:
- GST/HST applies across the country on equipment and installation labour.
- PST/QST applies in provinces with a separate provincial sales tax (B.C., Saskatchewan, Manitoba and Quebec), subject to provincial rules.
- Exemptions: Some provinces have exempted specific energy-efficiency or renewable equipment from provincial sales tax at various times. These rules change, so ask your installer whether an exemption applies and confirm with your provincial finance ministry.
Make sure your quote shows taxes clearly. On a $25,000 project, the difference between a quote "plus tax" and "tax included" can easily be a few thousand dollars.
Is there a federal tax credit for homeowners?
Not in the way some people expect. Canada has several major clean technology investment tax credits, but they're designed for businesses and large projects, not for families installing equipment on their own house. Federal support for homeowners has mostly come through grant, rebate and loan programs instead.
Those programs change frequently. The Canada Greener Homes Grant closed to new applicants in 2024, and the companion interest-free loan has since stopped accepting new applications as well. Newer federal programs have been announced with a focus on heat pumps and lower- and middle-income households, and many provinces and utilities run their own. Rather than relying on any article for current amounts, use our rebate finder to see what applies at your address, and our financing page for loan options.
Are rebates taxable?
For rebates or grants received for upgrades to your own home (your principal residence), these generally aren't treated as taxable income for individuals. However, if the property is a rental or used in a business, a government grant usually reduces the cost you can deduct or depreciate. If you're unsure, check the program's own guidance or ask a tax professional.
Net metering, selling power and income tax
How you're paid for solar power matters.
| Arrangement | How it typically works | General tax treatment |
|---|---|---|
| Net metering | Excess power earns bill credits that offset your future usage | Generally viewed as reducing your own costs, not earning income |
| Micro-generation with bill credits at a set rate | Similar to net metering, common in Alberta | Usually treated like net metering for a household that's mainly offsetting its own use |
| Contract to sell power (feed-in tariff style) | You're paid cash for every kWh produced under a long-term contract | Can be business income; GST/HST registration may be relevant above certain thresholds |
Ontario's former microFIT program is a well-known example where homeowners received payments for power and had to consider income tax and HST implications. Most current residential programs in Canada are net metering or credit-based, which keeps things simpler. Our solar page explains net metering and how credits work.
Rental properties and home businesses
If you own a rental property — or use part of your home for a business — renewable equipment may be deductible over time rather than in one year. Canada's capital cost allowance (CCA) system includes classes for certain clean energy generation and conservation equipment, and zero-emission vehicles have their own classes too. In general:
- The equipment must be used to earn income.
- The deduction is spread over several years according to the CCA class rate.
- Any government grant for the equipment usually reduces its depreciable cost.
- If only part of your home is used for business, only that portion may qualify.
Because CCA rules are technical and claiming CCA on part of a principal residence can affect the principal residence exemption, this is where professional advice really pays off.
Selling a home with solar, a heat pump or a battery
For a principal residence, any value the equipment adds to your home is normally covered by the principal residence exemption on capital gains. A few practical points:
- Owned equipment usually transfers with the house and can be a selling point. Keep invoices, warranties and production or efficiency data to share with buyers.
- Rented or leased equipment must be disclosed, and the buyer may need to assume or buy out the contract.
- Liens or registered security interests tied to equipment financing can delay a sale. Our guide to avoiding solar and heat pump scams explains how to check before you sign.
Property tax and home insurance
Property tax treatment of residential renewables varies by province and municipality. In some places, rooftop solar or heat pumps have little or no effect on assessed value; elsewhere, major renovations may lead to reassessment. Your municipal assessment office can tell you how it's handled locally.
For insurance, let your insurer know about solar panels or batteries. They may affect your coverage limits or premiums, and you'll want to be sure the equipment is covered for hail, fire and liability.
What about the carbon price?
The federal consumer fuel charge was set to zero in April 2025, so households no longer pay that charge directly on natural gas, propane, heating oil or gasoline. Industrial carbon pricing continues separately. For homeowners, this means fuel-switching savings now depend mostly on energy prices and equipment efficiency rather than the consumer carbon charge. Our carbon page explains how carbon pricing works in Canada today.
Frequently asked questions
Can I claim my home solar system on my income tax return?
For a system on your own principal residence that isn't used to earn income, there's generally no federal deduction or credit to claim. Rental and business use is different and may allow capital cost allowance.
Do I need to charge GST/HST on electricity I export to the grid?
Households on standard net metering, where exports simply earn bill credits, typically don't. If you sell power under a contract for payment, GST/HST registration rules may apply depending on your total taxable revenue.
Does a heat pump or solar system increase my property taxes?
It depends on your province and municipality. Some places see little change in assessed value, while others may reassess after major upgrades. Contact your local assessment office for a definitive answer.
The bottom line
For the typical homeowner, taxes on home renewables come down to paying sales tax up front and keeping good records. The tax picture changes when income enters the picture — rentals, home businesses or selling power for cash — so get professional advice in those cases. For the incentives that reduce your upfront cost, check our rebate finder before you sign any contract.
Sundamentals is an independent, non-profit education platform. Program details and prices change often — check current programs for your address in our rebate finder.