Treasury and IRS Provide Guidance on Energy Credit To Home Builders
Updated Feb. 4, 2008 — Recent legislative changes have extended this credit to apply to new homes located in the United States whose construction is substantially completed after August 8, 2005, and which are purchased after December 31, 2005, and prior to January 1, 2009, for use as a residence.
IR-2006-32, Feb. 21, 2006
Washington — The Internal Revenue Service today provided guidance regarding the energy efficient homes credit available under the Energy Policy Act of 2005. Under the new provision, an eligible contractor who constructs a qualified new energy efficient home may qualify for a credit of up to $2,000. The credit is available for all new homes, including manufactured homes constructed in accordance with the Federal Manufactured Homes Construction and Safety Standards.
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.
In general, to meet the energy saving requirements, a home must be certified to provide a level of heating and cooling energy consumption that is at least 30 to 50 percent in the case of manufactured homes, and 50 percent for other homes below that of a comparable home constructed in accordance with the standards of the 2004 Supplement to the 2003 International Energy Conservation Code. It must also have building envelope component improvements providing a level of heating and cooling energy consumption that is at least 10 percent below that of a comparable home.
Manufactured homes can also qualify for the credit by meeting Energy Star standards.
Site-built homes qualify for a $2,000 credit if they reduce energy consumption by 50 percent relative to the International Energy Conservation Code standard.
Manufactured homes qualify for a $1,000 or $2,000 credit depending on the level of energy savings achieved. The guidance provides information about the certification process that a builder must complete to qualify for the credit. The guidance also provides for a public list of software programs that may be used in calculating energy consumption for purposes of obtaining a certification.
Notice 2006-27 provides guidances for the credit for building energy efficient homes other than manufactured homes.
Notice 2006-28 provides guidance for the credit for building energy efficient manufactured homes.