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What is the tax credit for new homes?

A credit of $2000 is available to home builders who build homes (including both site-built and manufactured homes) projected to save at least 50% of the heating and cooling energy of a comparable home that meets the standards of the 2004 International Energy Conservation Code (the 2003 code including the 2004 supplement). A $1000 credit is available to manufactured home producers for models that save 30% or that qualify for the federal Energy Star Homes program.

These credits are available for buildings or systems placed in service from January 1, 2006, through December 31, 2009.

Read an IRS summary of the credit here.

*Update: RESNET has completed a survey of rating providers regarding the number of homes that their raters certified for the federal tax credit (2007 only). 23,702 homes were certified by RESNET during 2007, which is triple the number of homes certified in 2006. For more information, click here.
Who is eligible for the federal tax credit?

These credits go to the builder or producer of the home.
What are the incentives and how do they work?

* Credits are available for homes placed in service (i.e. ready and available for use) from January 1, 2006 through December 31, 2009.
* Site-built homes: Builders can take a credit of $2000 per home, in the year that that the home is sold. The home must be certified to use at least 50% less energy than a comparable home that complies with the standards provided in the 2003 IECC, including 2004 supplement, and uses a SEER 13 air conditioner. Building envelope improvements must account for at least 1/5 of the 50% energy savings.
* Manufactured homes: Producers can take a credit of $2000 per home, in the year that that the home is sold, for meeting the 50% savings criterion. Alternately, they can claim a credit of $1000 for each home that is certified to save 30% or that qualifies for the U.S. EPA Energy Star Homes program.

What goes into a high-efficiency new home?

Homes can qualify for these credits using a wide range of energy efficiency measures. These can include better-insulated foundations, walls, and ceilings; high-efficiency windows; well-sealed framing and air ducts; high-efficiency heating and cooling systems; and other innovative design and construction methods.
What must I do to qualify for the incentive?

* Site-built homes:
o DOE is now preparing guidelines on suggested design and construction techniques for reaching the 50% savings threshold. These should be available soon at U.S. Department of Energy website.
o A presentation at the January 2006 International Builder's Show (270 KB PDF) identifies possible packages for different climate zones.
o IRS guidance specifies that builders obtain certification that a new home qualifies from an independent certifier accredited by the Residential Energy Service Network or an equivalent program. Details can be found on the IRS website.
o EnergyGuage software helps determine compliance.
* Manufactured homes:
o Consult the U.S. EPA website.
o IRS guidance specifies that manufacturers obtain certification that a new home qualifies from an independent certifier accredited with the Residential Energy Service Network or an equivalent program. Details can be found on the IRS website.

Click here to access IRS guidance on qualifying new homes.

Where can I find out more about qualifying homes?

* Site-built homes: www.eere.energy.gov/buildings/building_america
* Manufacturered homes: Energy Star
* Accredited Rating Providers from Residential Energy Services Network (RESNET)
* RESNET: www.natresnet.org
o RESNET Presentation: Procedures for Certifying Residential Energy Efficiency Tax Credits for New Homes (114 KB PDF) *This does not represent any official government or TIAP member positions.
o RESNET Presentation: The New Homes Credit (858 KB PDF)
* IRS Bulletins & Information
o General Information, links to notices
o Accredited Software
o Standards for Calculating Energy Savings

Forms

* IRS Form 8908

Posted in: on Thursday, January 21, 2010 at at 7:12 AM 0 comments    

Businesses can get deductions for new or renovated buildings that save 50% or more of projected annual energy costs for heating, cooling, and lighting compared to model national standards, and partial deductions for efficiency improvements to individual lighting, HVAC and water heating, or envelope systems.
Commercial Vehicles

Credits are available to businesses as for consumers, including heavy-duty hybrid gasoline-electric vehicles. Information on passenger vehicles.
Combined Heat and Power

New! Investment tax credit for combined heat & power systems (CHP)
On-Site Renewables

Businesses are eligible for tax credits for qualified solar water heating and photovoltaic systems, and for certain solar lighting systems.
Fuel Cells & Microturbines

In addition to a fuel cell credit like that for consumers, credits are available to businesses who install qualifying microturbines. These systems, which typically run on natural gas, are small power-producing systems sized to run small to medium size commercial buildings.

Posted in: on at at 7:11 AM 0 comments    

The Worker, Homeownership, and Business Assistance Act of 2009 (signed into law on November 6) gives your small business a potentially valuable tax break if it has a 2009 net operating loss (NOL).

Under the general rule, you can carry a net operating loss (NOL) back for two tax years and deduct it against taxable income in those years. Depending on the NOL’s size, you would then get a refund for some or all of the taxes paid for those earlier years. The new law allows you to do much better, because you can carry back a 2009 NOL for as many as five years (with a twist for that fifth year).

The new extended NOL carryback deal is allowed for large and small businesses alike. However for smaller businesses, the new deal is layered on top of a similar extended NOL carryback deal that was included in the 2009 Stimulus Act. Under the earlier break, you could carry back a 2008 NOL for three, four, or five years, but only if the loss was from a business with average annual gross receipts of $15 million or less.

For example, say your small business had a 2008 NOL. You could elect to carry it back as far as 2003 and recover some or all of the federal income taxes paid for that year. If you still had some NOL left, you could deduct the remaining amount against your 2004 income, then against your 2005 income, and so on until the NOL was fully utilized. And if you still had some 2008 NOL left after the carrybacks, you could carry the leftover amount forward for up to 20 years to offset taxable income in 2009 and later years.

Under the new Worker, Homeownership, and Business Assistance Act of 2009, you can elect to carry back either a 2008 or 2009 NOL for three, four, or five years. If you already took advantage of the earlier Stimulus Act provision to carry back a 2008 NOL for more than two years, the new law allows you to do almost the same thing with a 2009 NOL. The difference: under the new break, an NOL carried back to the fifth preceding year can’t be used to offset more than 50% of that year’s taxable income.

Follow these steps to decide what to do with a 2009 small business NOL:

1. Gather your last three or five years of tax returns.
2. Figure out whether to carry back the NOL for two, three, four, or five years.
3. If you decide to go all the way back to the fifth prior tax year, use the NOL to offset up to 50% of the taxable income for 2004. To claim a tax refund from the NOL carryback, you will generally want to file Form 1139 for a C corporation NOL or Form 1045 for an individual NOL caused by losses from partnerships, S corporations, LLCs, or sole proprietorships. The IRS generally will process these refund claims within 90 days. If you still have some NOL left over, follow the same general procedure for the 2005 tax year. However, you can use the NOL carryback to offset up to 100% of the 2005 taxable income. Continue this same procedure for 2006 and so on until the NOL is all used up.
4. If you chose to carry back the NOL for less than five years, follow the same basic procedures. However in this case, you can use the NOL to offset up to 100% of the taxable income for the earliest year and for each subsequent year in the carryback period.

Your other option is to elect to carry the entire 2009 NOL forward for up to 20 years. This could be the right choice if you expect to pay higher tax rates in future years than you did in the past.

Posted in: on Thursday, January 14, 2010 at at 2:41 PM 0 comments