Energy-Efficiency Tax Credits Reinstated

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By Erin Weaver

The American Taxpayer Relief Act of 2012, passed on January 1, 2013, to avoid the so-called fiscal cliff includes the reinstatement of two tax credits for energy-efficient residences and appliances. Title 26 subsections (SS) 45L and 25C are in effect through December 31, 2013, and retroactively to their previous expiration on December 31, 2011, making them applicable to both 2012 and 2013 projects. SS45L is a business tax credit of up to $2,000 for contractors or developers building or renovating dwelling units of up to three stories, including multifamily properties; the credit may be claimed for each unit. The previous version of SS45L required a 50% reduction in energy use compared to the 2003 International Energy Conservation Code (IECC); this has been changed to reference the 2006 IECC. This is not a substantial change to efficiency requirements, as the 2006 IECC update largely focused on simplifying compliance; properties qualifying for the credit based on the previous version are likely to meet the new standards. SS25C is an individual tax credit of 10% of the cost of efficient appliances or property improvements, such as insulation. The credit is capped at $500 and is applicable to all improvements from Decemeber 31, 2011, to December 31, 2013.

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January 28, 2013