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"Green Energy" Gets New IncentivesAMERICAN RECOVERY AND REINVESTMENT ACT: "GREEN ENERGY" GETS NEW INCENTIVES BY: THE GRASSI GREEN TEAM
Residential Energy Property Tax Credit Extended and Made Better The new law extends and liberalizes a nonrefundable personal credit for expenses to install energy-efficient items in a U.S. principal residence. Improvements that can qualify for the credit include insulation, windows, doors, roofs, and heating and cooling equipment. Here are the enhancements:
Time Limit: The revamped credit is only available for property placed in service between January 1, 2009 and December 31, 2010 (it was unavailable for 2008). For tax years beginning in 2009, the credit can be used to offset both regular tax and AMT liabilities. The Residential Energy Efficient Property Credit is Improved
Specifically, the Recovery Act removes the annual dollar caps on credits for the first three categories, effective for tax years beginning after 2008. (The annual credit cap of $500 per .5 kilowatt hour of fuel cell capacity is still in place. The cap for solar electricity generation equipment was removed by 2008 legislation.) For tax years beginning after 2008, the Residential Energy Efficient Property credit is allowed to reduce both regular tax and AMT liabilities. For Individuals and Businesses: An Expanded Alternative Motor Vehicle Credit Covers Plug-In Electric Vehicle Conversions
The two well-known existing credit components cover qualified new hybrid gas-electric vehicles (such as the Ford Escape hybrid) and qualified new lean-burn vehicles (such as the new lean-burn diesel models put out by Mercedes and Volkswagen). The two lesser-known existing credits are for qualified new fuel cell vehicles and new alternative fuel vehicles (such as those that run on compressed natural gas). The new fifth credit covers costs to convert vehicles into qualified plug-in electric vehicles. Specifically, the new credit equals 10 percent of the cost to convert a new or used vehicle into a qualified plug-in electric drive motor vehicle. The maximum credit is $4,000. It can be claimed for qualified conversions placed in service after February 17, 2009, the date the new law was enacted. However, conversions after December 31, 2011 won't be eligible. For tax years beginning after 2008, the five personal alternative motor vehicle credits are allowed to reduce both regular tax and AMT liabilities for individual taxpayers. Overhauled Credit for Plug-In Electric Vehicles for Individuals and Businesses The Recovery Act overhauls the existing nonrefundable personal and business tax credit for new plug-in electric drive motor vehicles. The changes are effective for qualifying vehicles that are purchased after December 31, 2009. (Used and leased vehicles do not qualify.) Under the revamped provisions, the credit can range from $2,500 to $7,500. For purposes of this credit, the description of qualifying vehicles is changed to facilitate the establishment of two new credits for other types of plug-in electric vehicles (see below). The revamped credit will start to phase out once more than 200,000 qualifying vehicles have been sold for use in the U.S. in periods after December 31, 2009. For tax years beginning after 2008, personal plug-in electric vehicle credits are allowed to reduce both regular tax and AMT liabilities for individual taxpayers. Important: Under prior law, bigger credits are allowed for heavier plug-in electric vehicles (those with gross vehicle weight ratings above 10,000 pounds) that are acquired in 2009. There's a New Credit for Low-Speed, Two-and Three-Wheeled Plug-In Electric Vehicles (for Individuals and Businesses) The new law creates a new nonrefundable personal and business tax credit for:
This credit cannot be claimed for a vehicle acquired during the eligible dates if it also qualifies for the other plug-in electric vehicle credit explained above. For tax years beginning after 2008, personal credits for low-speed, two-wheel, and three-wheel vehicles can be used to reduce both regular tax and AMT liabilities for individual taxpayers. For Individuals and Businesses, There's an Improved Credit for Alternative Fuel Vehicle Refueling Property The Recovery Act liberalizes the nonrefundable personal and business tax credit for non-hydrogen alternative fuel vehicle refueling property. The changes apply to qualified property placed in service in tax years beginning in 2009 and 2010. Examples of what this credit can cover include costs to install ethanol or compressed natural gas refueling pumps or equipment to recharge electric-powered car batteries. The personal version of this credit can be claimed for qualifying equipment installed at an individual's principal residence. The business version of this credit can cover qualified costs at a gas station or other business location. The Recovery Act increases the credit percentage for non-hydrogen refueling property from 30 to 50 percent. The new law increases the annual credit cap from $1,000 to $2,000 for personal non-hydrogen property installed at an individual's principal residence. The annual per-location credit cap for business non-hydrogen property is increased from $30,000 to $50,000. The legislation also upgrades the business credit for hydrogen alternative fuel vehicle refueling property by jumping the annual per-location credit cap from $30,000 to $200,000 for equipment placed in service in tax years beginning in 2009 and 2010. (For hydrogen refueling equipment, the credit percentage remains at 30 percent, and the annual cap on the personal credit for hydrogen equipment installed at a principle residence remains at $1,000.) Under current law, personal credits for alternative fuel vehicle refueling property cannot be used to reduce AMT liabilities for individual taxpayers. If you have questions about how the American Recovery and Reinvestment Act of 2009 will affect you, please contact Jed Dallek, Tax Partner, Grassi Green Team Leader and Real Estate Practice Leader. Jed can be reached at (516) 336-2430 or via e-mail at jdallek@grassicpas.com.For more information on the Grassi Green initiative, check out our website at www.grassicpas.com/grassigreen. |
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The American Recovery and Reinvestment Act of 2009 includes numerous energy-related tax changes. This article summarizes some of them, starting with the ones that affect individual taxpayers.
The new law liberalizes the Residential Energy Efficient Property credit, which is a nonrefundable personal credit for 30 percent of expenditures to install in a U.S. residence:
Under tax law, there is already a nonrefundable personal and business "alternative motor vehicle credit." The Recovery Act adds a new credit component on top of the four existing components. In effect, there are now five different credits covering five different types of vehicles.
The new credit equals 10 percent of the cost of a qualified vehicle. The maximum credit is $2,500. Eligible vehicles must be acquired between February 18, 2009 and December 31, 2011. (Used and leased vehicles do not qualify.)