Are you absolutely confused about "green tax credits?"
We hear the terminology enough, as green building and green products aren't short on press coverage. Too often, however, it seems that the tax credit system isn't actually explained, and one is left to wade through Google searches to understand how to qualify for these tax breaks.
Tax Credits for Home Builders
Yes, you read that correctly....there are tax credits available to home builders who build homes to certain energy standards. These tax credits apply to builders of new manufactured or non-manufactured homes.
This is a great way for home builders to make extra money on a home building project, and can be especially beneficial to home builders who build tens or hundreds of homes each year.
Each new home that achieves 50% more energy savings from the 2004 International Energy Conservation Code (IECC) qualifies for a $2000 tax credit. A 30% energy savings qualifies for a $1000 credit. Builders simply need to fill out and return IRS Form 8908
To qualify for these credits, the home must be completed after August 8, 2005, and sold between Jan. 1 2006 and December 31, 2009. Builders who have built qualifying homes, but did not apply for the credit, can still apply.
We're still waiting to see whether these credits are extended past the end of the year. More detailed information about the IECC and the tax credits can be found at this link: http://www.energystar.gov/index.cfm?c=tax_credits.tx_hm_builders
Tax Deductions for Commercial Buildings
Environmental tax credits are not just for residents and residential builders.
To understand these available deductions, it's important to read about and understand the ASHRAE Standard 90.1 2001
Commercial buildings qualify for a tax deduction up to $1.80 per square foot when new or existing commercial buildings save 50% of the heating and cooling energy of a building that meets ASHRAE standards.
The amount of deduction depends on the building savings. The deduction can be made to the owner or designer of the building. They are available for HVAC systems placed in service from Jan 1 2006 through Dec 31, 2013.
Check out IRS Notice 2006-52
for guidance on how to make these deductions. Check out this link for more details: http://www.energystar.gov/index.cfm?c=tax_credits.tx_comm_buildings
Tax Credits for Homeowners
Far and away, the most available tax credits are available to homeowners.
For existing homes in 2009 and 2010, homeowners can get up to 30% of the cost for energy efficient installations of windows and doors, insulation, roofs, HVAC systems, water heaters and biomass stoves.
For new and existing homes through the year 2016, tax credits are available to homeowners of up to 30% the cost of energy efficient installations of geothermal heat pumps, solar panels, solar water heaters, small wind energy systems, and fuel cells.
Information on each available credit is available at this link, in easy to understand language: http://www.energystar.gov/index.cfm?c=tax_credits.tx_index
How to Get A Better Grip
Learning more about available tax credits is both easy and hard for the same reason: there is a of information on the subject out there.
Here are some good resources:
(the BIBLE of energy tax credits - including a summary chart of tax credits for homeowners)
The Tax Incentive Assistance Project (TIAP)
Read about pending Tax Credit Legislation
Check Out this Residential Flyer from the TIAP
Check Out this Commercial Flyer from the TIAP
This article was originally posted on Wolfe Law Group’s topic-specific Louisiana Green Building Law Blog.