If you built or remodeled an energy-efficient home last year, Congress may have lightened the tax load for you and your clients.
Tax filing season is here, which means that business owners across the country are looking for ways to ease their tax burden. For construction professionals who build or remodel energy-efficient homes and buildings, a set of "tax extenders" passed by Congress at the end of 2014 could make the tax load a little lighter.
The Tax Increase Prevention Act of 2014 retroactively extended several important energy efficiency tax credits and deductions, though only through the end of 2014.
Construction pros should take advantage of these incentives while they can. They will be extended again in 2015, they may be allowed to permanently expire as part of a larger tax reform deal.
When we think tax reform, we think mortgage interest deduction, but those who are involved in new construction or remodeling with green building and energy efficiency should probably keep these items in mind as well for 2015.
Here are the energy efficiency highlights of the tax deal:
Section 45L Tax Credit for Energy-Efficient New Homes
Section 45L provides a tax credit of up to $2,000 for builders of new energy-efficient homes. To qualify, the home must reduce heating and cooling energy consumption by 50% compared with the 2006 International Energy Conservation Code (IECC). Building envelope component improvements must account for at least one-fifth of the reduction in energy consumption.
In many cases, building to your current code and upgrading to high-efficiency propane building systems is enough to qualify builders for the 45L credit. Many jurisdictions already use a more rigorous code than the 2006 IECC baseline, so you may be closer to qualifying for this credit than you realize. In many cases, building to your current code and upgrading to high-efficiency propane building systems is enough to qualify builders for the credit.
Section 25C Tax Credit for Qualified Energy Efficiency Improvements
Section 25C provides a credit of up to $500 for consumers to install qualified energy-efficient upgrades. While this credit had a fairly major impact during the stimulus period in 2009 and 2010, encouraging homeowners to upgrade to more efficient roofs, windows, and water heaters, it's been weakened with the addition of a $500-lifetime cap.
To qualify, propane furnaces and boilers must meet an annual fuel utilization efficiency (AFUE) of 95 or higher; the credit covers costs up to $150. Propane water heaters must have an energy factor of at least 0.82 or a thermal efficiency of at least 90 percent. Water heaters are eligible for a credit of up to $300. Our product directory can be sorted by efficiency level, product category, and manufacturer to find equipment that meets your needs.
Section 179D Energy-Efficient Commercial Buildings Deduction
Section 179D provides a tax deduction for building owners who made their new or renovated commercial buildings more energy efficient in 2014 — including multifamily buildings built under the commercial code. A building that improves its lighting, HVAC systems and building envelope could max out the deduction at $1.80 per square foot. High-efficiency propane heating systems can help building owners achieve the program requirements.
Not all of the useful energy efficiency tax incentives expired at the end of 2014. The rapidly growing Section 25D Residential Renewable Energy Tax Credit provides a homeowner credit of up to 30% of the cost to install solar water heating, photovoltaics, wind power, fuel cells, and geothermal heat pump systems in new and existing homes, with no cap, and it's in law until 2016.
Propane heating or backup power can enhance the performance and reliability of many of these systems. For instance, a propane/geothermal hybrid heating system offers improved comfort compared with geothermal-only systems and may allow installers to downsize the geothermal installation.
While these tax incentives are important to remember every April, the Propane Education & Research Council offers year-round incentives for installing energy-efficient, propane-fueled technology. The Propane Energy Pod Builder Incentive Program provides up to $7,500 to builders who use propane equipment such as space heating, water heating, and cooking in their homes. The Propane Heat and Power Incentive Program provides up to $10,000 to participants who install eligible propane-fueled products such as premium generator sets and combined heat and power systems.
In addition, some local propane companies offer rebates ranging from $100 to $700 for the safe installation of propane appliances. To see if your state participates in a safe installation rebate program, check out our newly updated list of propane incentives and tax credits.
If you are looking to update your property and are looking for a knowledgeable contractor for full support please contact Executive Craftsman directly for a free estimate at firstname.lastname@example.org or 203-324-6383 directly.