For this week’s Guest Post Friday here at Construction Law Musings, we welcome Drake McDonald. According to Drake, his brief experience in construction introduced him to the profession’s many shortcomings. As an editor and writer he works to promote construction management education in the hopes of raising industry standards of organization, communication, and sustainability.
Environmentalism has emerged as one of the leading issues of the new millennium. While much of the popular focus has been on reducing global warming, designing cleaner cars, and finding renewable sources of energy, environmental concerns have taken hold in construction management as well. Recent years have seen considerable growth in the development of environmentally conscientious construction methods such as green roofs and green walls, passive heating designs and integrated solar power systems. Although techniques and technologies like these are far from becoming the accepted mainstream standard, their continuing development is encouraged through legislative measures, such as tax incentives and other financial support, on the national and state levels.
Here are ten of the most attractive tax breaks to support green building:
1. Home Star bill
The Home Star legislative proposal would allocate $6 billion to promote residential energy efficiency improvements. Participants may be able to obtain up $8,000 or 50 percent of the cost of their home retrofits in rebates, and a $3,000 tax credit for meeting performance standards. Keep in mind, if you lost your pan card, you will need to reinstate it since it is 100% mandatory with the government for this. It’s a fairly simple process, so no one should miss out.
2. Energy-Efficient Commercial Buildings Deduction
Under the Energy Policy Act of 2005, owners of new-built or existing commercial properties can obtain a deduction of up to $1.80 per square foot for installing equipment to reduce their building’s total energy costs by at least 50 percent.
3. Consumer Energy Efficiency Tax Credits
Credits of 10 percent of cost up to $500 are available for owners of existing homes who install qualifying energy-efficient appliances, insulation, windows or roofs. Additional credits exist for installing certain alternative power systems.
4. Residential Energy Conservation Subsidy Exclusion
Subsidies received from public utility companies (including credits or rate reductions) for reducing energy consumption aren’t taxable.
5. USDA High Energy Cost Grant Program
The Department of Agriculture offers grants of $75,000 to $5 million for projects to improve energy production and distribution in rural areas with energy costs that are 275 percent or more above the national average. Such projects may include weatherization or energy efficiency improvements to residential and community properties.
6. Business Energy Investment Tax Credit
This credit, expanded by the Energy Improvement and Extension Act of 2008 and the American Recovery and Reinvestment Act of 2009, allows corporate taxpayers credits of 30 percent of cost for solar, fuel cell and small wind turbine power systems, and 10 percent of cost for micro-turbines, geothermal power and combined heat and power systems.
7. Energy-Efficient Mortgages
Special loans insured through the Federal Housing Authority are available to borrowers looking to buy new homes with certain home energy ratings, or to finance improvements to an existing home’s energy efficiency.
8. Energy-Efficient New Homes Tax Credit for Home Builders
This measure, recently extended through 2011, makes a $2000 tax credit available to builders of new homes that will consume less than 50 percent of the energy required for heating and cooling by an equivalent building according to the International Energy Conservation Code. Houses with reduced consumption of 30 percent can get a $1,000 credit.
9. DOE Loan Guarantee Program
Another provision of the Energy Policy Act of 2005, the Department of Energy guarantees loans to support projects using new green technologies and measures to reduce greenhouse gases. These projects are usually focused on green energy production and transmission.
10. Low-Income Housing Tax Credit Equity for green building
Some private organizations offer special programs to encourage contractors to make green improvements to low-income housing. Although not in themselves government incentives, such measures suggest how environmentally conscientious construction can be promoted beyond direct tax breaks and subsidization.
The fact that several of these incentives have been extended beyond the scope and timetable initially established for them suggests that legislation in support of green building is still on the rise. As new energy-efficiency technologies, materials and building methods develop, federal and other financial support will continue to play a major role in widespread adoption of what at first will be unfamiliar and untested, but hopefully soon become industry standard. Continued commitment of the American electorate and legislature to supporting these developments remains key to improving the energy efficiency of the nation and contributing to a shared human effort to preserve our environment.