With the goal of simplifying the U.S. tax code, Republican Senator Dave Camp (R-Mich.), chairman of House Ways & Means Committee in the U.S. House of Representatives, released The Tax Reform Act of 2014 this week. Of note to green building advocates: In chipping away the code, Camp's proposal also eliminates a number of building-related energy efficiency credits.
Forbes and the National Association of Home Builders have great breakdowns for the general real estate and housing industries, while our sister publication Multifamily Executive drills down on the effects to the multifamily realm. Bloomberg's got overall analysis and general feedback of the plan as a whole. But what's the general scoop for high-performance building professionals?
Here's a cheat sheet. Camp's proposal includes eliminating the following credits:
- Credit for energy-efficient improvements to the envelope of a taxpayer's primary residence. Under this credit, taxpayers could claim 10 percent of expenditures on energy-efficient windows, doors, skylights, or roofs, as well as for installing energy-efficiency equipment such as furnaces, boilers, heat pumps, and water heaters. There was a lifetime cap of $500 and this credit expired at the end of 2013.
- Credit for energy-efficient commercial buildings. This credit, which expired at the end of 2013, allowed taxpayers to claim a deduction for energy-efficient commercial building expenditures prior to 2014, up to $1.80 per square foot of property that benefited from the expenditures.
- Credit for construction of a new, energy-efficient home. Another credit that expired at the end of 2013, this one allowed contractors to claim credit of $1,000 or $2,000 for constructing a new energy-efficient home prior to 2014. To qualify, the home had to achieve a 30- or 50-percent reduction from a comparable home in heating or cooling energy consumption.
- Credit for energy-efficient appliances. Once again, this credit expired at the end of last year, but allowed taxpayers to claim credit for certain energy-efficient appliances such as dish washers, clothes washers, and refrigerators.
- Credit for solar or geothermal energy systems. This credit, which expires at the end of 2016, provides up to a 30-percent nonrefundable credit to businesses for the cost of new solar or geothermal systems (excluding those that heat swimming pools).
In response to Camp's proposal, the AIA issued the following statement from CEO Robert Ivy, FAIA:
“We applaud Rep. Camp for tackling one of the most challenging issues on Capitol Hill–reforming the tax code. We support simplification of the code–and the underlying effort to create a more uniform tax rate structure, which should help our more than 83,000 members in design and construction recover from the Great Recession.
“We have serious concerns about some of the changes the Camp tax proposal will have on the myriad tax provisions that help small design firms build energy efficient buildings and continue to grow in this challenging economy. We look forward to examining the Camp proposal in greater detail and assert that tax reform legislation can help with the survival and prosperity of the small business sectors which are vital to the continued growth of the American economy.”
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