The US House of Representatives approved a tax extenders bill worth 42 billion dollars. The short-term package will enable the retroactive extension of several energy efficiency incentives including section 45L tax credit.
Meaning of the Tax Extenders Bill
The bill envisions the extensions of various energy efficiency incentives that expired in 2013. The provision, however, is just for one year. The fact that the extension is annual and valid until December 2014 has angered some industry advocates.
The measure is called Tax Increase Prevention Act of 2014. Its approval got overwhelming support in the US House of Representatives with 378 votes in favor and 46 votes against the measure.
The tax extenders bill is a 55-item package, Reuters reported. The New Market Tax Credit, the New Energy Efficient Home Credit in section 45L, the Production Tax Credit, the Energy Property Credit, the Second Generation Biofuel Producer Credit and several other incentives are included in the package.
The US Senate is expected to address the Tax Increase Prevention Act of 2014 in the near future.
Tax Incentives for 2014 Energy Efficiency Improvements
If the Senate and President Barack Obama approve the tax extenders bill, house owners and residential property investors will benefit from the section 45L energy efficient home credit for qualifying improvements executed throughout 2014.
Some industry advocates worry that the expiration of the tax incentives in 2015 will once again lead to controversy and intense debates concerning the availability of energy efficiency stimuli for residential property owners and businesses dealing with such improvements or construction projects.
With less than a week before the December holidays begin, most analysts predict that Congress is not going to seek further expansion of the bill. There is some chance for more pronounced reforms in 2015 when the Republicans will have control over both the US House of Representatives and the Senate.
Section 45L Qualifying Improvements
With a possible extension of section 45L incentives on the horizon, what types of home improvements and energy efficiency projects will result in a tax credit?
There are several kinds of energy efficiency installations that give access to a credit worth 30 percent of the equipment’s value. These projects include solar electricity systems, solar water heating systems, fuel cell property, small wind electricity production systems and geothermal heat pump installations.
The section 45L energy efficiency tax credit applies to all primary residences, second houses and vacation properties on the territory of the US. The only exception is for the geothermal heat pump installation, in which case the credit is available for primary residence installations solely.
There has been a long debate about the extension of energy efficiency tax credit and the latest developments show that there is some light in the end of the tunnel. If you’ve worked on green residential property projects in 2014, chances are that you’ll benefit from a lucrative incentive. We’ll keep you updated about the latest decisions concerning energy efficiency tax credits and the upcoming Senate decision on the Tax Increase Prevention Act of 2014.
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