Thursday, June 13, 2013

Tax Credit for Energy-Efficient Mobile Homes

The Internal Revenue Code provides a tax credit to developers and construction contractors who build energy-efficient residential houses.  A tax credit is also provided to the manufacturers of energy-efficient mobile homes (manufactured homes), which happens to be more generous than the credit for non-mobile homes.

Internal Revenue Code section 45L generally  provides a tax credit of $2,000 for a home with annual heating and cooling costs that is 50% less than a comparable dwelling.*

If a mobile home achieves only a 30% energy savings, the credit is reduced to $1,000. But no credit is allowed for a non-mobile home with 30% energy savings.

The credit is claimed by the seller (the developer or contractor), not the buyer.  The home can be a newly built home, or a substantially reconstructed or renovated home, as long as the home is sold to someone as a residence.  The buyer can use the home as a secondary or vacation residence. 

The credit was originally enacted in 2005 to apply only to homes sold in 2006 and 2007, but it has been extended several times since then, most recently to apply to homes sold through the end of 2013 as part of the urgently needed sequester tax legislation.  It is unclear whether a $2,000 tax credit was necessary to stimulate the sale of new homes (median sales price ~$250,000) during the housing boom.  Congress in 2005 noted that there was no tax credit for the construction of energy-efficient homes, and naturally therefore one should be created.

* Technically, the comparable dwelling has to be constructed in accordance with the standards of chapter 4 of the 2006 International Energy Conservation Code, as such Code (including supplements) is in effect on January 1, 2006, and for which the heating and cooling equipment efficiencies correspond to the minimum allowed under the regulations established by the Department of Energy pursuant to the National Appliance Energy Conservation Act of 1987 and in effect at the time of completion of construction.

Section 45L New energy efficient home credit.
(a) Allowance of credit.
(1) In general.
For purposes of section 38, in the case of an eligible contractor, the new energy efficient home credit for the taxable year is the applicable amount for each qualified new energy efficient home which is—
(A) constructed by the eligible contractor, and
(B) acquired by a person from such eligible contractor for use as a residence during the taxable year.
(2) Applicable amount.
For purposes of paragraph (1) , the applicable amount is an amount equal to—
(A) in the case of a dwelling unit described in paragraph (1) or (2) of subsection (c), $2,000, and
(B) in the case of a dwelling unit described in paragraph (3) of subsection (c), $1,000.
(b) Definitions.
For purposes of this section—
(1) Eligible contractor.  The term “eligible contractor” means—
(A) the person who constructed the qualified new energy efficient home, or
(B) in the case of a qualified new energy efficient home which is a manufactured home, the manufactured home producer of such home.
(2) Qualified new energy efficient home.  The term “qualified new energy efficient home” means a dwelling unit—  (A) located in the United States,  (B) the construction of which is substantially completed after the date of the enactment of this section, and (C) which meets the energy saving requirements of subsection (c).
(3) Construction.  The term “construction” includes substantial reconstruction and rehabilitation.
(4) Acquire. The term “acquire” includes purchase.
(c) Energy saving requirements.
A dwelling unit meets the energy saving requirements of this subsection if such unit is—
(1) certified—
(A) to have a level of annual heating and cooling energy consumption which is at least 50 percent below the annual level of heating and cooling energy consumption of a comparable dwelling unit—
(i) which is constructed in accordance with the standards of chapter 4 of the 2006 International Energy Conservation Code, as such Code (including supplements) is in effect on January 1, 2006, and
(ii) for which the heating and cooling equipment efficiencies correspond to the minimum allowed under the regulations established by the Department of Energy pursuant to the National Appliance Energy Conservation Act of 1987 and in effect at the time of completion of construction, and
(B) to have building envelope component improvements account for at least 1/5 of such 50 percent,

(2) a manufactured home which conforms to Federal Manufactured Home Construction and Safety Standards (part 3280 of title 24, Code of Federal Regulations) and which meets the requirements of paragraph (1), or

(3) a manufactured home which conforms to Federal Manufactured Home Construction and Safety Standards (part 3280 of title 24, Code of Federal Regulations) and which—
(A) meets the requirements of paragraph (1) applied by substituting “30 percent” for “50 percent” both places it appears therein and by substituting “1/3” for “1/5” in subparagraph (B) thereof, or
(B) meets the requirements established by the Administrator of the Environmental Protection Agency under the Energy Star Labeled Homes program.
***

1 comment:

  1. Thanks for sharing this! I have been considering energy star homes because of how much money that I will be saving in the long run. I think that theses houses are definitely the way to go.

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