Sustainable Land Development Today - July/August 2008 - (Page 14) in energy costs for the interior lighting systems, a 20-percent reduction in energy costs for the heating, cooling, ventilation and hot water systems, or a 20-percent reduction in energy costs for the building envelope. Under the second option, a partial deduction requires a 16.67-percent reduction in energy costs for one or more of the qualifying systems. For partially qualifying property, the lifetime cap on the deduction for each qualifying system in any building is $0.60 per square foot. Special interim rules apply to property installed as part of the interior lighting system of a building before the publication of final regulations under Section 179D. A partial deduction may be available if the interior lighting systems incorporated into the building achieve a reduction in lighting power density of at least 25 percent (50 percent in the case of a warehouse) of certain minimum requirements specified in Standard 90.1-2001 and certain other requirements are met. The deduction for energy efficient commercial building property installed in a building owned by a federal, state, or local government may be allocated to the designer of the building. For this purpose, the designer is the person who created the technical specifications for the installation of energy efficient property (e.g., an architect, engineer, contractor, environmental consultant or energy services provider). A person who merely installs, repairs, or maintains the property is not a designer. If there is more than one designer, the building owner may allocate the deduction either to the designer who is primarily responsible or among several designers. The allocation of the deduction must be in writing and must meet other specified requirements. A home is a “qualified new energy efficient home” if: • it is located in the United States; • its construction is substantially completed after August 8, 2005; • it meets certain energy savings requirements; • it is acquired from an eligible builder after December 31, 2005 and before January 1, 2009 for use as a residence. A home qualifies for the full $2,000 credit if: • the building is certified as reducing energy consumption by 50 percent compared to a home that was constructed in accordance with certain national and international standards; the Residential Energy Services Network, or an equivalent rating network that performs such certifications, using software approved by the Internal Revenue Service. The tax basis of the property for purposes of calculating depreciation deductions and gain or loss on any disposition is reduced by the amount of any credit taken. Energy credit for solar energy property A third set of incentives applies to solar energy equipment. Section 48 of the Code provides a nonrefundable income tax credit equal to 30 percent of the tax basis of any “energy property,” including certain solar energy equipment that is placed in service during a tax year. To qualify for the 30-percent credit, energy property must be placed in service before January 1, 2009. “Energy property” includes depreciable equipment that uses solar energy to generate electricity, heat or cool a structure, provide hot water to a structure, provide solar process heat, or illuminate the inside of a structure using fiber-optic distributed sunlight, but does not include solar equipment used to heat a swimming pool. The tax basis of the solar energy equipment for purposes of calculating depreciation deductions and gain or loss on any disposition is reduced by 50 percent of the amount of any credit taken. If the taxpayer financed the project in whole or in part with subsidized energy financing or tax-exempt private activity bonds, the basis on which the credit is calculated is reduced. • building-envelope improvements account for at least one-fifth of the 50-percent reduction. A manufactured home qualifies for a $1,000 credit if: • it is certified as reducing energy consumption by at least 30 percent and building envelope improvements account for at least one-third of the 30-percent reduction; • it complies with requirements under the Energy Star Labeled Homes program. To meet the certification requirements, a home must be certified by a person who is accredited or authorized by The energy efficient home tax credit for builders Section 45L of the Code allows a tax credit of up to $2,000 for builders of “qualified new energy efficient homes,” including manufactured homes constructed in accordance with the Federal Manufactured Home Construction and Safety Standards. 14 July/August 2008 Sustainable Land Development Today
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