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Expiring Energy Tax Incentives Extended
Tucked away in the financial rescue package approved by Congress last week is a set of provisions championed by NAHB that extend several expiring energy tax incentives in the Internal Revenue Code, including those for new home construction (Section 45L), existing homes (Section 25C) and commercial buildings and larger multifamily properties (Section 179D).
Section 45L allows a $2,000 tax credit for the construction and sale or lease of a home that achieves a 50% reduction in energy use relative to a home constructed according to the 2004 IECC energy code. This incentive locks in energy cost savings for the lifetime of a home, which averages more than 60 years. The usage of this credit has increased nearly three-fold from 2006 levels, demonstrating that it is performing as Congress intended and gaining acceptance in the marketplace.
NAHB successfully advocated numerous regulatory changes that have also made it easier for builders to certify that their energy-efficient homes qualify for the credit.
The legislation extends the new energy efficient home credit through the end of 2009. Under prior law, it was scheduled to expire at the end of 2008.
“Extending this credit for an additional year will ensure that it is in place when the housing market turns around,” said NAHB Chairman Sandy Dunn. “That way, more home buyers can reap the benefits of high-efficiency homes constructed with the help of this tax incentive.”
The Section 25C credit will provide immediate help with reducing utility bills while addressing one of the most significant contributors to energy inefficiency — existing homes.
Taxpayers can use the incentive, for example, to purchase high-efficiency windows or heating and cooling appliances, or make other home renovations that can save literally hundreds of dollars per year in energy costs.
The tax credit for existing homes, which expired on Dec. 31, 2007, will be reinstated for installations made in calendar year 2009. The credit was not extended for installations in 2008.
The 179D deduction supports increased energy efficiency in the multifamily housing sector, a significant segment of the housing market, by providing a deduction per square foot of the property placed in service.
This credit targeting commercial and large multifamily energy improvements has been extended five years through Dec. 31, 2013.
For more information, e-mail Greg Brown at NAHB, or call him at 800-368-5242 x8421.
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