Congress is currently in the process of reviewing a proposal that would alter a popular tax incentive used om residential construction.
Section 45L has allowed homebuilders to receive tax credits of up to $2,000 per dwelling unit for installing energy efficient systems.
Made effective in early 2006, the measure has proved particularly popular with contractors building affordable housing, assisted living facilities, and student housing, among other projects.
Scheduled to expire at the end of this year, the credit could be extended to the end of 2031 under new legislation.
That legislation, if passed, will base eligibility upon participation in the Energy Star Residential New Construction Program, with credits increasing to $2,500.
The legislation would also establish a new “higher-tier” credit of $5,000 for the construction of single-family homes certified by the Department of Energy’s Zero Energy Ready Home Program as being zero-energy.
Eligibility for multifamily projects, meanwhile, would also be based upon Energy Star Residential New Construction Program participation. But the credit would be reduced from $2,000 per dwelling unit, to $500.
The proposal has met with criticism from those who say it would make the process more complicated and possibly reduce the number of eligible recipients for both new construction and renovation projects.
In a letter to House Ways and Means Committee, James Tobin, executive vice-president of the National Association of Home Builders, said designers and developers should be able to “retain flexibility on the methods for achieving the expected energy performance levels.”
The proposed changes to the tax credit, asserted Tobin, “will fail to serve the purpose of incentivizing broadly increased energy efficiency.”
But, in a letter to The Hill, Jules Kortenhorst, chief executive officer of the nonprofit RMI, which specializes in energy issues, said the proposal would improve 45L “by offering multiple tiers of incentives for zero-carbon performance.”
The 45L proposal is part of the larger Build Back Better plan, which could see a Congressional vote in the next few days.
By Garry Boulard
