Ways & Means Advances Reconciliation Legislation that Includes Energy Efficient Commercial Buildings Deduction Changes
The House Ways and Means Committee completed consideration of reconciliation legislation that includes several provisions of interest to the industry—including a number focused on energy efficient incentives.
Additionally, taxpayers would be able to take a deduction for energy efficient lighting, HVAC and building envelope costs placed in service as part of a retrofit.
- What This Means: Beginning in 2022, the base credit for buildings with four or more stories that exceed 25 percent of ASHRAE standards in effect three years before a building is placed into service would be $0.50 per square foot for energy savings. It would increase by $0.02 per square foot for every percentage point by which energy savings exceed the 25 percent baseline threshold, up to $1.00 per square foot. Bonus amounts, as described above, are available for taxpayers meeting applicable labor requirements.
- Industry Impact: While these changes take positive steps to enhance this tax incentive, the legislation also includes a number of pay-fors that could negatively impact the industry. Specifically, it would raise ordinary income, capital gains and carried interest tax rates. It is important to remember that these proposals are just one step in a long process and subject to further change.
- NMHC's Viewpoint: Although prospects for this bill’s passage in the Senate are murky, NMHC is working with lawmakers to ensure they are educated on the various pieces of this legislation that will impact the industry.
Learn More:
This legislation’s potential impact on the industry go far beyond this particular tax incentive. Click through for a deep-dive from NMHC staff on the various other provisions that are included and how they could impact your business: https://www.nmhc.org/news/nmhc-news/2021/ways-means-advances-tax-provisions-impacting-multifamily/