Saturday, December 16, 2006
Show Me the Money, or What the “Do Nothing” Republican Congress Just Did
In the “Tax Relief and Health Care Act of 2006, H.R. 6111, Title II – Energy Tax Provisions , the following tax credits and deductions were extended through the end of 2008 (from the end of 2007), effectively two years from now:
1. Energy efficiency deductions of up to $1.80 per sq.ft. for commercial facilities reducing energy use by 50%, measured by ASHRAE standard 90.1-2001 (as of April 2, 2003), for the year the property is placed in service. This is a great boon to high-performance buildings now in design or construction that will be occupied by the end of 2008. A $0.60 per sq.ft. deduction is available for partial compliance of the interior lighting, HVAC and building envelope, so that retrofits can qualify just for lighting efficiency upgrades, for example.
2. For the energy-efficiency investments by a public agency or school, the law provides for the design team lead to take the tax deduction. On a 250,000 sq.ft. high school, for example, the design team lead (typically the architect) could potentially qualify for a $450,000 tax deduction. Large design firms should especially take a look at this.
3. Builders get a tax credit per home (including manufactured homes) deduction extended to homes “placed in service” by the end of 2008, that exceed by 30% the standards of Chapter 4 of the 2003 International Energy Conservation Code in effect on August 8, 2005 (for a $1,000 credit, or by 50% for a $2,000 credit). Manufactured homes can only get the $1,000 tax credit. Energy Star labeled homes also qualify for a $1,000 per unit tax credit, in lieu of meeting the IECC.
4. Residential solar electric and water heating systems qualify for the 30% tax credit (maximum credit of $2,000 for each type of system), for systems placed in service by the end of 2008.
5. Business solar electric and thermal systems are eligible for a 30% tax credit, with no limit, for systems placed in service through the end of 2008.
All these provisions are in current law, which was due to expire at the end of 2007. With the one-year extension on the books, design teams now can move forward with including these systems for projects that will be occupied by the end of 2008.
We believe that the new Congress will extend these deadlines further in 2007, at least through the end of 2010, but that remains to be seen. We believe that the new Congress will take this and possibly more dramatic actions to lessen our dependence on imported oil and to reduce greenhouse gas emissions from buildings. Stay tuned, as the “greatest show on earth” convenes again right after New Year’s, with a new cast of leaders and a new, if shaky mandate from the public to set things right in a lot of spheres.
Source: Technical Explanation of H.R. 6408, etc., prepared by the Staff of the Joint Committee on Taxation, accessed December 16, 2006, at: www.house.gov/jct/x-50-06.pdf 2006 Tax Relief Act.
Posted by Jerry Yudelson on 12/16/2006 at 09:14 AM
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