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Being Green Can Be Taxing

Incentives Help Encourage Change

Article written by Jack Carr, P.E., R.S., LEED AP, Criterium Engineers
Published in Condo Media, June 2010
The Government is finally getting ‘it’. Ask any non-profit organizer how difficult it is to find volunteers. For years the government has been asking for volunteers to reduce energy consumption and change their inefficient energy habits, but that request has gone on both commercial and residential deaf ears.
Now things are changing. The government recognizes that for people to change their black carbon footprints to green, there has to be money behind its requests, either in the form of tax incentives or cost penalties. This article will focus on being a primer for learning about the incentives. 

Commercial Tax Incentives

Let’s start with some little known tax incentives for energy savings on the commercial side. The Internal Revenue Service (IRS) and Department of Energy (DOE) created a program under the Energy Act of 2005 called Section 179D which establishes targets for energy-savings components including building envelope; heating, ventilation, and air conditioning (HVAC) including hot water; and lighting fixtures.
If a developer of a commercial building or condominium designs a project that meets these DOE targets, the IRS will allow a tax deduction equivalent to 30 cents per square foot of the building size for each of the three goals. That is, if all three targets are met a condo developer could get a $1.80 a square foot tax break.
Up until this program, the developer had little incentive to putting extra effort into creating an exceptionally energy-efficient building. After all, how many condo buyers check out the light fixture’s energy consumption before making their real estate decision? As a side note, the Government realized it was not incentivizing the designers of its own public buildings under this program, as public building owners do not file tax returns. To correct this inconsistency the IRS allows any local, state, or federal building owner to pass its entire potential tax savings for meeting the DOE targets to the designer of the building. If you know an architect, pass this along because few know about this program.

Credit & Rebates for Homeowners

As most condo associations do not pay taxes, let us focus on how the current tax incentives can assist unit owners in making energy decisions. Perhaps when you just filed your tax return you noticed an energy tax credit Form 5695 next to all of the other forms and instruction booklets, but you were too rushed with your tax return preparation to learn about the current program. Here is your chance to reduce your 2010 tax payments.
A tax credit of 30% up to $1500 is available to offset the cost of a many Energy Star items for existing, principal residences. These include biomass stoves, HVAC equipment, insulation, roofs with reflective coatings, non-solar water heaters, windows, and doors. You will need a Manufacturer’s Certification Statement from your dealer or manufacturer’s web site that states the item in question meets the efficiency standards. This incentive expires at the end of this year.
A tax credit of 30% (up to $1,500) is available to offset the cost of many Energy Star items for existing, principal residences. These include bio-mass stoves, HVAC equipment, insulation, roofs with reflective coatings, non-solar water heaters, windows and doors. You will need a manufacturer's certification statement from your dealer or manufacturer's website that states the item in question meets the efficiency standards. This incentive expires and the end of this year.
A tax credit of 30% with no upper limit is available for new and existing, primary and secondary homes until 2016 with the installation of a geothermal heat pump, small wind turbine or solar energy system. Here again, only a certificate on file is needed to take this tax credit.
Also, a 30% tax credit up to $500 per 0.5 kW of power capacity for a new and existing primary home by the installation of a residential fuel cell and micro turbine system until 2016. There is no upper limit of household income to take advantage of any of these tax credits.
Other well-known Energy Star programs provide rebates for many common appliances for the home. To learn more call 888-363-7289.  Many condominium developers feature Energy Star Qualified Homes as a marketing strategy. Energy Star can assist associations in doing low-cost energy audits, get energy savings advice, and online energy planning and calculating tools at Here in Maine the ‘Efficient Maine’ program at can help finance energy savings projects including arranging for energy audits.
So with all of these programs and incentives being offered, it is clear that the folks in the government are getting ‘it’ that now is the time to act if America is to take a leadership position in reducing its dependence on foreign sourced oil and reducing the carbon levels being released. The question is, do we get ‘it’.