General information
on the federal tax credits:
For more information on
available tax breaks see:
http://www.energy.gov/taxbreaks.htm
http://www.energystar.gov/index.cfm?c=products.pr_tax_credits#s6
IRS form 8908 needed for builder's Energy
Efficient Home Credit:
http://www.irs.gov/pub/irs-pdf/f8908.pdf
Tax deductions for Commercial
building owners:
http://www.energystar.gov/index.cfm?c=products.pr_tax_credits#s8
Notes on how to achieve tax credit compliance: PDF Word Doc
Builder Tax Break F.A.Q.
Q: In general what allows
a home to qualify for the tax credit?
A:
To meet the energy saving requirements, a home must use no more than 50% of the
energy used by a home built to 2004 International Energy Conservation Code (IECC)
standards.
Q: How does a builder determine
if their homes will qualify for the tax credit?
A: The only
way to determine if a home will qualify for the tax credit is to have an analysis
done using one of the approved IRS software programs.
Q:
Who can qualify for the new homes tax credit?
A: Under the provision
for energy efficient homes tax credit, an eligible contractor who constructs a
qualified new energy efficient home may qualify for the credit.
Q: What form must a builder complete the tax credit?
A: To claim the tax credit the eligible contractor must complete IRS form 8908.
The tax form is posted on the IRS web site and can be viewed by pasting the following
link into your browser window: www.irs.gov/pub/irs-pdf/f8908.pdf
Q: Is the form complicated to complete?
A:
No. An eligible contractor simply enters the total number of qualified energy
homes meeting the 50% standard and multiples that amount by $2,000.
Q: What qualifies as a new energy efficient home?
A: The home qualifies for the credit if:
" It is located in the United
States;
" Its construction is substantially completed after August 8,
2005;
" It meets the statutory energy saving requirements, and
" It is acquired from the eligible contractor after December 31, 2005, and
before January 1, 2008, for use as a residence.
Q:
Do homes eligible for the Energy Star label also meet the requirements for the
tax credit?
A: No. The requirements to meet Energy Star and
the tax credit are different. Qualification for Energy Star covers all energy
use in a house, including water heating, lighting and appliances, while requirements
for the tax credit only include space heating and cooling.
Q:
Can a builder certify their own homes for the tax credit?
A:
No. The IRS rules states that the person who certifies the home must "not
related (within the meaning of 45(e)(4)) to the eligible contractor."
Q: Who can verify homes for the tax credit?
A: Homes must be inspected and tested by an "eligible certifier",
commonly referred to as a home energy rater. In Ohio these are usually certified
RESNET Energy Raters.
Q: What documentation
must a builder have to apply for the tax credit?
A: The builder
must first have the home tested by an eligible certifier (home energy rater) and
obtain a signed document from the eligible certifier stating the following: "Under
penalties of perjury, I declare that I have examined this certification, including
accompanying documents, and to the best of my knowledge and belief, the facts
presented in support of this certification are true, correct, and complete."
The IRS recommends that the eligible builder retain the certification as part
of the contractor's records to document that the home meets the requirements.
Q: What is the time period in which the tax credit
can be claimed?
A: To qualify for the credit, homes must be
acquired from the eligible contractor after December 31, 2005, and before January
1, 2008. The program will probably be extended into 2009 and beyond.
Q: Can a homeowner apply for the tax credit?
A: No, only eligible contractors can apply for the tax credit.
Q: Can homes be verified for the tax credit using the "sampling" method?
A: Yes. The IRS allows sampling as long as the builder builds at least 85 homes
a year and the eligible certifier (home energy rater) follows the current Environmental
Protection Agency's ENERGY STAR Homes Sampling Protocol Guidelines. Of course
the certifier must also sign the required statement certifying the home's compliance.
Q: Can multi-family homes be eligible for the tax
credit?
A: Yes. The IRS defines all homes are eligible for the
tax credit as long as the building is not more than three stories above grade
in height.
Q: The IRS rules states that the
tax credit is $2,000 per qualifying dwelling unit. How does the IRS define a "dwelling
unit"?
A: The IRS defines a dwelling as a "single
unit providing complete independent living facilities for one or more persons,
including permanent provisions for living, sleeping, eating, cooking and sanitation."
Q: What's the difference between a tax credit and
tax deduction?
A: Tax deductions reduce tax payer's overall
taxable income with the value of the deduction dependent on the payer's tax bracket.
Tax credits on the other hand reduce the amount of tax a taxpayer owes dollar
for dollar. Tax credits are more economically powerful than deductions.
If you have additional questions or want to schedule a
rating, please call or write us today! We look forward to serving you.
Brian Smith
President, ESCS
brian@escs1.com
330-322-9812
