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Did you build (or are you building) an energy efficient residential housing project in 2015 or 2016?

Posted by admin on January 15, 2016

Great News: You can earn a $2,000/unit tax credit!

With the all holiday egg nog, gift-giving and time with family and friends you are excused for missing the news that Congress did something; they passed a budget bill which was signed into law by President Obama just prior to Christmas. Included in the budget legislation was a provision to retroactively renew a $2,000 tax credit for developers of energy efficient new residential dwellings. This tax credit, originally signed into law under the Bush Administration in 2005, had expired at the end of 2014. The renewed law now allows dwellings completed in 2015 as well as those to be completed by December 31st, 2016 to be eligible for the tax credit.

Most developers/builders who were familiar with this law believed it only applied to for-sale single family or condominium units. With our experience however, as energy raters and building science experts since 1997, we questioned this assumption and went to work. Through our independent research, as well as meetings with tax law attorneys, accountants and representatives of the Department of Energy, we helped a client who had completed a 252 unit for-rent apartment development in 2014 in Brighton, CO to earn tax credits on 182 of those 252 units. His buildings had central heating/cooling with individually metered electricity to each unit. He earned a $364,000 tax credit for 2014 tax year, could you use one of those?

As you may guess, the Fed’s don’t just give this money away. The requirement for earning the $2,000/unit tax credit includes the following:

  • It is located in the United States;
  • Its construction is substantially completed before December 31, 2016;
  • Homes/units qualify for the tax credit if they are certified to reduce heating and cooling energy consumption by 50% relative to the International Energy Conservation Code (IECC) 2006 and meet minimum efficiency standards established by the Department of Energy. Building envelope component improvements must account for at least one-fifth of the reduction in energy consumption.
  • It is acquired/leased from the eligible contractor after December 31, 2013, and before January 1, 2017, for use as a residence.

So, how do you certify your apartment building’s unit completed in 2015, or to be completed in 2016, as having reduced heating and cooling energy consumption by 50% relative to the International Energy Conservation Code (IECC) 2006? Well, the reason this blog’s title references building for future generations is that your perspective on the building’s investment in insulation, air-sealing, windows, and heating/cooling equipment for your building(s) can NOT be simply what is the least expensive to build to meet the building code but must have the perspective of what it will cost in energy bills –and the subsequent environmental impact- to operate the building for 50, 75, 100 or more years into the future.

A long-term perspective on operating costs today changes the economics of construction. It can result in doubling the R-value of the walls, ceiling and/or foundation (i.e., envelope) that are otherwise required by Code. It could make having your building(s) heated and/or cooled by Ground Source Heat Pumps (GSHP). It could also include the installation of solar water heating to offset conventional means of heating and cooling. It will certainly include quality assurance inspections/tests to make sure that all building envelope details are installed as they should be to optimize the performance of the building.

This is where Lightly Treading, Inc. steps in. Lightly Treading offers comprehensive solutions for advance energy, efficiency, and comfort. We are RESNET certified energy raters who can provide the construction specifications, perform the computer modeling and conduct the inspections and tests to conclude you are eligible to have your unit’s certified for the $2,000 tax credit.

You can contact us to learn more at 303-733-3078, x301, paulk@lightlytreading.com or fill out our form to get more details HERE.  Additionally, Paul Kriescher, Principal of Lightly Treading, Inc., will be delivering a presentation on the tax credit and ENERGY STAR Benchmarking on Tuesday, February 23rd 4pm for the IROC (Independent Rental Owners Council) with representatives of the City of Denver. Contact Lightly Treading to learn more. www.lightlytreading.com.

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