Published on April 8, 2008
New Homes Tax Credit: New Homes Tax Credit TIAP Webinar Steve Baden - RESNET www.resnet.us Federal Tax Credit for New Homes: Federal Tax Credit for New Homes Site Built Homes $2,000 to builder for each home whose performance is calculated to exceed Heating and Cooling Use of Section 404 of 2004 Supplement of the IECC by 50% (Does not count water heating/renewable energy production – covered by other incentives) Federal Tax Credit for New Homes: Federal Tax Credit for New Homes Effective Dates Homes built after August 2005 and purchased between January 1, 2006 and January 1, 2008 Federal Tax Credit for New Homes: Federal Tax Credit for New Homes IRS Rule – IRS 2006-27 + 3rd Party Inspection Required – Certified by RESNET or Equivalent Rating Certification Organization + Software Tool Must Comply with RESNET Software Test Specifications Slide5: www.resnet.us/standards/tax_credits/procedures RESNET Federal Tax Credit Software Specifications: RESNET Federal Tax Credit Software Specifications + Auto-Generation of the Reference Homes (2004 Supplement to IECC) + HERS BESTEST + RESNET HVAC Tests + Duct Distribution System Efficiencies Tests Federal Tax Credit Software Tools Accredited by RESNET: Federal Tax Credit Software Tools Accredited by RESNET + Energy Gauge USA (Florida Solar Energy Center) + Micropas (Enercomp, Inc.) + REM/Rate (Architectural Energy Corporation) + Builder Energy Solutions (ICF Resources) RESNET Federal Tax Credit Inspection Specifications: RESNET Federal Tax Credit Inspection Specifications + Homes Shall be Independently Field Tested + Field Verification Shall Follow RESNET’s Home Energy Rating Procedures + Person Who Certify Home’s Qualification for Tax Credit Shall be Trained and Certified in Accordance with RESNET’s National Home Energy Rating Procedures Tax Incentives for Home HVAC Equipment and Appliances: Tax Incentives for Home HVAC Equipment and Appliances David B. Goldstein, Ph.D. Natural Resources Defense Council San Francisco [email protected] Presented at Tax Incentives Assistance Project Webinar 21 July 2006 Goals of the Tax Incentives: Goals of the Tax Incentives Make highest efficiency products available to everyone Attract market attention with multi-year incentives Harmonize with existing programs Consortium for Energy Efficiency (CEE) Energy Star HVAC Program Status: HVAC Program Status Original intent was a 4-5 year program Manufacturers have indicated that this is the time needed to justify major investments in production capacity for high-efficiency equipment EPAct Incentives were trimmed to 2 years (2006-2007) Snow/Feinstein Bill, S. 3628 extends the program to 5 years (adds 2008-2010) How Do You Qualify?: How Do You Qualify? Manufacturer certifies eligibility Online resources show product availability: www.energytaxincentives.org www.cee1.org/resid/rs-ac/rs-ac-main.php3 www.gamanet.org/gama/inforesources.nsf/vContentEntries/Product+Directories?OpenDocument www.energystar.gov/index.cfm?c=products.pr_tax_credits#1 Limited to taxpayer’s principal residence Qualifying Levels of Efficiency I: Qualifying Levels of Efficiency I Qualifying Levels of Efficiency II: Qualifying Levels of Efficiency II Product Availability: Product Availability The goal of multi-year incentives is to increase availability and demand dramatically This is beginning to work: Air conditioners: thousands of products are now available compared to about 5 in 2004 Furnaces: about 100 qualifying products are available Appliances: Appliances A manufacturer credit: consumers don’t see the money Likely to lead to more products and greater availability at CEE and Energy Star levels Eligible products can be found at : http://www.energystar.gov/index.cfm?fuseaction=find_a_product. Qualifying Products: Qualifying Products Refrigerators: Incentives for Energy Star and CEE Tier 1 and Tier 2 products (15%, 20% and 25% below federal standards) Clothes washers: 2007 Energy Star level (1.72 MEF, 8.0 WF) Dishwashers: 2007 Energy Star level (.65 EF) Solar - Residential and Commercial ITC: Solar - Residential and Commercial ITC Colin Murchie, Director of Government Affairs Solar Energy Industries Association (202) 682 0556 x 2 [email protected] Solar - Residential and Commercial ITC: Solar - Residential and Commercial ITC 30% Credit on Capital Costs through 2007 26 USC 48 Permanent 10% Commercial ITC For solar water heating, air heating, lighting, PV Includes equipment and installation 5 – year carryforward Credit Limitations and Requirements: Credit Limitations and Requirements Pool Heating Equipment Ineligible $2,000 cap for residential systems SRCC (www.solar-rating.org) or state certification of heating equipment AMT ineligible AMT eligibility effort underway – www.seia.org Non-transferable Sale – leasebacks permitted, ownership required Additional Resources: Additional Resources www.findsolar.com Contractors, reviews, recommendations, etc. www.dsireusa.org All state incentives www.seia.org Credit extension effort Tax Manual continuous updates IRS precedent Qualifying for the New Home Tax Credit: Qualifying for the New Home Tax Credit Examples in 9 U.S. Cities TIAP Web Seminar July 21, 2006 Philip Fairey Introduction: Introduction Simulations and calculations performed using EnergyGauge® USA – qualified through software tests required by RESNET Pub 005-01 Only one of many possible solutions provided for each climate (best orientation) No mechanical ventilation – all homes with natural infiltration at 0.35 ach All insulation is assumed installation Grade I Results indicate that many new homes, in all parts of the country, may ultimately qualify for federal tax credits. Home Characteristics: Home Characteristics * Very similar to examples provided by Micropas Envelope Characteristics: Envelope Characteristics * Light in color Window Characteristics: Window Characteristics * To follow Micropas example Lighting & Appliances: Lighting & Appliances * high-efficiency fixtures / qualifying fixture locations HVAC Equipment: HVAC Equipment * tight = tested to 3 cfm 25,out per 100 ft2 conditioned area Conclusions: Conclusions Qualification not difficult in very mild climates Window selection is important, with changes in SHGC making a significant difference, even in northern climates Efficient lighting and appliances provide significant benefit in cooling dominated climates Relatively “standard” envelope features can make the goal with only “moderate” increases in HVAC efficiencies if ducts are good Tight ducts located in conditioned space provide significant benefit for both heating and cooling. Tax Credit Software: Tax Credit Software Software providing for analysis for tax credit qualification available to anyone Software for “certification” purposes is only available to IRS “certifiers” ‘Try before You Buy’ Software is available online as a free downloadable at http://EnergyGauge.com Integrating Tax Incentives into Energy Efficiency Programs: Integrating Tax Incentives into Energy Efficiency Programs Rick Gerardi Director, Residential Programs NYSERDA New Homes: New Homes Planning on a “Better-Best” Strategy “Better” = New York ENERGY STAR® Labeled Homes – core voluntary program - Continued training and technical assistance to builders - NY Incentives of $750- $1000 per home - 13% market share “ENERGY STAR Best of the Best” = tax credit-eligible homes and fulfill NYS requirements with additional specs - Additional training and technical assistance to builders and Raters - Combination of NY incentives and tax credit built into software - Targeted mid-stream marketing Existing Homes: Existing Homes Home Performance with ENERGY STAR® Program which promotes comprehensive retrofits to address comfort, health, safety and energy Typically achieving 30% energy savings $500 federal tax incentive a modest sweetener We will tell homeowners about Not a major part of promotion A performance-based incentive with higher incentives for high savings will better complement our program E.g. as in the new Snowe-Feinstein bill Software documentation of energy percentage savings ENERGY STAR® Labeled Products: ENERGY STAR® Labeled Products Planning a “best of the best” campaign to promote high-efficiency appliances and other products which exceed Energy Star criteria - Will better align with tax credit eligibility in 2006 In 2007, Energy Star and tax credits will align for clothes washers and dishwashers but not refrigerators - “Best of the best” will still be important for levels above ENERGY STAR Moving Forward: Moving Forward Tax incentive levels and structure should be reexamined as part of extension discussions Restructuring particularly needed for existing homes ENERGY STAR should keep its specifications up-to-date E.g. refrigerator specification needs updating “ENERGY STAR Best of the Best” to increase specification levels when a state exceeds its ENERGY STAR market transformation goals NY will continue fine-tuning programs to maximize savings and cost-effectiveness through market-based strategies Commercial Buildings Tax Deduction: Commercial Buildings Tax Deduction Ed Gray Director, Energy Infrastructure National Electrical Manufacturers Association Commercial Buildings Tax Deduction: Commercial Buildings Tax Deduction Provides for energy efficient systems deduction up to $1.80 per square foot for whole buildings using 50% less energy on a cost basis than a building designed to ASHRAE/IESNA 90.1-2001, as of April 2001. Or $0.60 per square foot for systems improvements proportional to 50% energy savings for a whole building. Systems include lighting, HVAC/water heating, and building envelope. There is a special provision for federal, state or local government owned buildings Asset owner gets the deduction Allowable for assets placed in service from 1/1/06 through 12/31/07 For government buildings, the person primarily responsible for the design gets the deduction Lighting systems have an interim provision, so that design doesn’t have to wait on IRS regulations Certified designers, software, and inspectors must be used Tax Rule Schedule: Tax Rule Schedule IRS Notice 2006-52 includes self certification concept for design, software, inspection; forms showing technical basis to be retained by taxpayer, but not sent in with return Government buildings rules to be included in another Notice “Regulation” to be done later to include detailed rules “Certified” software likely to be available soon Interim lighting rules enable work to be done before regulations done Stakeholders need to review IRS work for potential comments IRS Clarified Issues: IRS Clarified Issues International Revenue Service Notice 2006-52 contains guidance; corrected version in Internal Revenue Bulletin 2006-26 dated June 26, 2006 Certifier and inspector may be professional engineer or contractor licensed in the building’s jurisdiction Software to be self-certified, to be listed on DOE website Inspector cannot be an employee of asset owner Alternatives for Deduction: Alternatives for Deduction Whole building 50% energy cost reduction Partial Deduction – Lighting Target Partial Deduction – HVAC Target Partial Deduction – Envelope Target Interim Lighting Rules* using ASHRAE prescriptive lighting tables (220.127.116.11 and 18.104.22.168) *Interim Lighting Rules only in effect until final regulations are published in Federal Register, NEMA has requested that “interim” rule alternative be made permanent Whole Buildings: Whole Buildings Reference Building meets Standard 90.1 minimum requirements in the manner specified Performance Rating Method (PRM) used to determine energy and power cost reduction percentage of proposed building compared to reference building (50% and 16.7% targets) Baseline reference building performance uses PRM in Appendix G of ASHRAE Standard 90.1-2004 California Title 24 “ACM” requirements: Internal loads (Tables N2-2 and N2-3) Infiltration modeling (Section 22.214.171.124) Luminaire power from Appendix NB (or manufacturers data) 50% Below 90.1-2001 Buildings: 50% Below 90.1-2001 Buildings Achieved for a small number of existing buildings Additional systems in the Technical Explanation of the legislation are not in the IRS guidance (renewable on-site generation, daylighting, efficient wiring, and others) A high degree of systems integration; and careful site selection and orientation needed Typical Design Features: Typical Design Features Efficient envelope systems High performance glazing and selective orientation with solar control Daylighting High efficiency lighting and controls High efficiency HVAC and controls Ventilation control and heat recovery PRM Information: PRM Information ASHRAE Standard 90.1-2004 (on-line, read-only) 2005 California Title 24 Nonresidential Alternative Calculation Method (ACM) Approval Manual http://www.energy.ca.gov/title24/2005standards/nonresidential_acm/index.html DOE list of approved software http://www.eere.energy.gov/buildings/info/tax_credit_2006.html NREL “Energy Savings Modeling and Inspection Guidelines for Commercial Building Federal Tax Deductions” EPAct 2005 System Deduction: EPAct 2005 System Deduction Provides for partial deduction for 3 major systems (lighting, HVAC/water heating, building envelope) that correspond to 50% reduction in building energy use IRS Notice 2006-52 states that 16.7% whole building savings are the system goal for each system Requires building modeling using certified software Software will be listed on a DOE website NEMA has commented that the reference building, from a lighting perspective, need only be based on the space use, LPD and square feet; it is not necessary to develop site specific references for lighting System Deduction: System Deduction IRS decision of 1/3 split means 16.7% energy cost reduction for each system (1/3 of 50%) Retail example using “custom targets”: Envelope: 22% of cost; 11% savings target Lighting: 28% of cost; 14% savings target Mechanical: 50% of cost; 25% savings target One-third split targets may be hard to meet Interim Lighting Provision: Interim Lighting Provision Until such time that final IRS rules are promulgated, lighting systems are eligible for a partial deduction. Key provisions: Deduction is $0.30 to $0.60 for 25 to 40% under ASHRAE LPDs, respectively, from Table 126.96.36.199 or 188.8.131.52. “Use it or lose it” allowances are not to be considered in the LPD reduction Warehouses must be 50% under to get $0.60 (no sliding scale) ASHRAE controls + “bi-level switching” required Industry has asked that provision be made permanent as the lighting system deduction Continuing Actions: Continuing Actions Convene technical stakeholders group to resolve details of ASHRAE vs. California methods and reference building Extend tax provision (several bills already introduced in Congress) Determine if other provisions need legislative solutions Continue promotional program Further Information: Further Information http://www.efficientbuildings.org http://www.lightingtaxdeduction.org http://www.energytaxincentives.org/tiap-commercial-bldgs.html http://www.advancedbuildings.net/ Vehicle Tax IncentivesTIAP Webcast: Therese Langer ACEEE Transportation Program July 21, 2006 Vehicle Tax Incentives TIAP Webcast Efficient vehicle incentives: Light-duty: Efficient vehicle incentives: Light-duty Consumer tax credit of up to $3400 for hybrids and diesels Based on fuel economy and lifetime fuel savings of vehicle relative to average in weight class Must meet threshold for emissions After a manufacturer sells 60,000 vehicles, credit amounts begin to decline Efficient vehicle credits: heavy-duty: Efficient vehicle credits: heavy-duty Status of market – light-duty: Status of market – light-duty Hybrids 11 eligible vehicles, gaining up to 93% of maximum credit None available in certain classes (e.g. pickup) Sales about ~ 1% of the market One manufacturer has already hit 60,000-vehicle threshold, no others will meet this year Diesels Not clean enough (yet) First one slated for release this year Fuel cell vehicles None commercially available Light-duty hybrid sales: Light-duty hybrid sales Status of market – heavy-duty: Status of market – heavy-duty Fleet issues: Fleet issues For tax-paying entities: Alternative Minimum Tax, sufficient tax liability For tax-exempt entities: seller gets the credit but must divulge amount to buyer Will seller pass on credit? Can seller take advantage? Availability of credit information relative to purchase cycle Fleet issues (cont.): Fleet issues (cont.) For heavy-duty, most purchasers will be fleets and many, tax-exempt First hybrid applications identified: transit buses, delivery trucks, waste haulers, and utility trucks “Seller” will typically be the manufacturer; how does this affect efficacy of the credits? Next steps: Next steps Light-duty Find out how credits influence manufacturer production plans and in particular what limits domestic manufacturers’ interest Improve fleet access to hybrids and test mechanism to accommodate tax-exempt purchasers and leasing Next steps (cont.): Next steps (cont.) Heavy-duty Expedite test procedure adoption to reduce uncertainty re credit availability Resolve tax-exempt, AMT issues Extend credits?