The Bottom Line
Real Estate
Green is Good:
Energy-Efficient
Homes Tax
Credit
By Yunna Barats
In the 1987 movie “Wall Street,”
Michael Douglas won an Oscar for
the role of Gordon Gekko, a powerhungry investment banker. One of the
highlights of the movie was Gekko’s
“Greed Is Good” speech.
Here is an excerpt from Gekko’s speech:
“The point is, ladies and gentleman, that
greed – for lack of a better word – is
good. Greed is right. Greed works. Greed
clarifies, cuts through, and captures the
essence of the evolutionary spirit. Greed,
in all of its forms – greed for life, for
money, for love, knowledge – has marked
the upward surge of mankind. And greed
– you mark my words – will not only save
Teldar Paper, but that other malfunctioning corporation called the USA.”
Fast forward 20 years to 2007. Hybrid
cars, solar heating panels, and high tech
energy- saving appliances are mainstream. It appears that “Green Is Good”
these days. Congress agrees and with
the Energy Tax Incentives Act of 2005
many new tax incentives were introduced for “green” taxpayers. One of the
highlights of the legislation was the tax
credit for builders of energy-efficient
homes. Eligible contractors can qualify
for a new tax credit when they construct
qualified new energy-efficient homes
(both site-built and manufactured).
For site-built builders can take a credit
of $2,000 per home in the year that that
home is sold. The home must be certified to use at least 50% less energy
WINTER 2007 | A PUBLICATION OF RBZ, LLP
than a comparable home that complies
with the standards provided the 2003
International Energy Conversation Code
(IECC), including supplements, and
uses a SEER 13 air conditioner. Building
improvements must account for at least
1/5 of the 50% energy savings.
For manufactured homes, manufacturers
can take a credit of $2,000 home, in the
year that that the home is sold, for meeting the 50% savings criterion. Alternately,
they can claim a credit of $1,000 for
home that is certified to save 30% or that
qualifies for the U. Energy Star Homes
program.
In addition to the energy savings requirements, homes must also meet the following requirements: (1) The home must
be located in the U.S. (2) Its construction includes substantial reconstruction
and rehabilitation) must be substantially
completed after August 8, 2005, and it
must be acquired in or 2007 and (3) The
home must be purchased by a person
from the eligible contractor for use as a
residence during the tax year.
What is an energy-efficient home?
Energy-efficient refers to range of energy-saving measures. Examples include
specially insulated walls and ceilings,
high-efficiency windows, high-efficiency heating cooling systems, and other
items that are specifically and primarily
designed to reduce heat loss or gain.
The new credit is the general business
credit. No credits attributable to energy
efficient homes can be carried back to
any tax year ending on or before effective
date of the credit. There’s also a basis
reduction in the property for the amount
of credit claimed.
For questions about this article contact:
Yunna Barats | 310-478-4148 x319 |
ybarats@rbz.com
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