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RESNET New Homes Tax Credit New Homes Tax Credit TIAP Webinar Steve Baden - RESNET

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Presentation on theme: "RESNET New Homes Tax Credit New Homes Tax Credit TIAP Webinar Steve Baden - RESNET"— Presentation transcript:

1 RESNET New Homes Tax Credit New Homes Tax Credit TIAP Webinar Steve Baden - RESNET

2 RESNET Federal Tax Credit for New Homes Site Built Homes $2,000 to builder for each home whose performance is calculated to exceed Heating and Cooling Use of Section 404 of 2004 Supplement of the IECC by 50% (Does not count water heating/renewable energy production – covered by other incentives)

3 RESNET Federal Tax Credit for New Homes Effective Dates Homes built after August 2005 and purchased between January 1, 2006 and January 1, 2008

4 RESNET Federal Tax Credit for New Homes IRS Rule – IRS 2006-27 +3 rd Party Inspection Required – Certified by RESNET or Equivalent Rating Certification Organization +Software Tool Must Comply with RESNET Software Test Specifications


6 RESNET RESNET Federal Tax Credit Software Specifications +Auto-Generation of the Reference Homes (2004 Supplement to IECC) +HERS BESTEST +RESNET HVAC Tests +Duct Distribution System Efficiencies Tests

7 RESNET Federal Tax Credit Software Tools Accredited by RESNET +Energy Gauge USA (Florida Solar Energy Center) +Micropas (Enercomp, Inc.) +REM/Rate (Architectural Energy Corporation) +Builder Energy Solutions (ICF Resources)

8 RESNET RESNET Federal Tax Credit Inspection Specifications +Homes Shall be Independently Field Tested +Field Verification Shall Follow RESNET’s Home Energy Rating Procedures +Person Who Certify Home’s Qualification for Tax Credit Shall be Trained and Certified in Accordance with RESNET’s National Home Energy Rating Procedures

9 Tax Incentives for Home HVAC Equipment and Appliances David B. Goldstein, Ph.D. Natural Resources Defense Council San Francisco Presented at Tax Incentives Assistance Project Webinar 21 July 2006

10 Goals of the Tax Incentives Make highest efficiency products available to everyone Attract market attention with multi-year incentives Harmonize with existing programs Consortium for Energy Efficiency (CEE) Energy Star

11 HVAC Program Status Original intent was a 4-5 year program Manufacturers have indicated that this is the time needed to justify major investments in production capacity for high-efficiency equipment EPAct Incentives were trimmed to 2 years (2006-2007) Snow/Feinstein Bill, S. 3628 extends the program to 5 years (adds 2008-2010)

12 How Do You Qualify? Manufacturer certifies eligibility Online resources show product availability: main.php3 main.php3 es?OpenDocument es?OpenDocument ucts.pr_tax_credits#1 ucts.pr_tax_credits#1 Limited to taxpayer’s principal residence

13 Qualifying Levels of Efficiency I Energy Efficiency Measure Minimum Efficiency Requirement Tax Credit Furnace fansElectric use no more than 2% of energy use of furnace $50 Natural gas, propane or oil furnace or hot water boiler 95 AFUE$150 Natural gas, propane or oil water heater 0.80 Energy Factor$300

14 Qualifying Levels of Efficiency II Energy Efficiency Measure Minimum Efficiency Requirement Tax Credit Electric heat pump water heater 2.0 energy factor$300 Electric heat pumpHSPF 9, SEER 15, EER 13 $300 Central air conditionersCEE Tier 2 (SEER 15/EER 12.5 for split units, SEER 14/EER 12 for single-packaged) $300 Geothermal heat pumpEnergyStar$300

15 Product Availability The goal of multi-year incentives is to increase availability and demand dramatically This is beginning to work: Air conditioners: thousands of products are now available compared to about 5 in 2004 Furnaces: about 100 qualifying products are available

16 Appliances A manufacturer credit: consumers don’t see the money Likely to lead to more products and greater availability at CEE and Energy Star levels Eligible products can be found at : on=find_a_product on=find_a_product.

17 Qualifying Products Refrigerators: Incentives for Energy Star and CEE Tier 1 and Tier 2 products (15%, 20% and 25% below federal standards) Clothes washers: 2007 Energy Star level (1.72 MEF, 8.0 WF) Dishwashers: 2007 Energy Star level (.65 EF)

18 Solar - Residential and Commercial ITC Colin Murchie, Director of Government Affairs Solar Energy Industries Association (202) 682 0556 x 2

19 Solar - Residential and Commercial ITC 30% Credit on Capital Costs through 2007 –26 USC 48 –Permanent 10% Commercial ITC For solar water heating, air heating, lighting, PV Includes equipment and installation 5 – year carryforward

20 Credit Limitations and Requirements Pool Heating Equipment Ineligible $2,000 cap for residential systems SRCC ( or state certification of heating equipment AMT ineligible –AMT eligibility effort underway – Non-transferable –Sale – leasebacks permitted, ownership required

21 Additional Resources –Contractors, reviews, recommendations, etc. –All state incentives –Credit extension effort –Tax Manual continuous updates IRS precedent

22 F LORIDA S OLAR E NERGY C ENTER A Research Institute of the University of Central Florida Qualifying for the New Home Tax Credit Examples in 9 U.S. Cities TIAP Web Seminar July 21, 2006 Philip Fairey

23 Introduction  Simulations and calculations performed using EnergyGauge® USA – qualified through software tests required by RESNET Pub 005-01  Only one of many possible solutions provided for each climate (best orientation)  No mechanical ventilation – all homes with natural infiltration at 0.35 ach  All insulation is assumed installation Grade I  Results indicate that many new homes, in all parts of the country, may ultimately qualify for federal tax credits.

24 Home Characteristics CityAreaHome Description Miami2,0001-story, block, slab-on-grade Houston2,0001-story, frame, slab-on-grade Dallas2,4002-story, frame, slab-on-grade Atlanta2,4002-story, frame, on crawl space Las Vegas2,0001-story, frame, slab-on-grade Long Beach*2,4002-story, frame, slab-on-grade Sacramento*2,4002-story, frame, slab-on-grade Baltimore2,0001-story, frame, on crawl space Burlington2,4002-story, frame, w/cond. basement * Very similar to examples provided by Micropas

25 Envelope Characteristics CityFloorRoofCeilingWalls MiamiR-0Tile*, RBSR-30R-7.6 HoustonR-0Comp, RBSR-32R-13 DallasR-0Comp, RBSR-32R-13 AtlantaR-30Comp, RBSR-38R-11+3 Las VegasR-0Comp, RBSR-32R-13 Long BeachR-0Comp, RBSR-30R-13 SacramentoR-0Comp, RBSR-30R-13 BaltimoreR-32CompR-48R-13+5 BurlingtonR-0CompR-48R-19, 19+3 * Light in color

26 Window Characteristics CityTypeFrameWFA%U-FactSHGC MiamiLow-eMetal180.570.28 HoustonLow-eMetal180.570.28 DallasLow-eVinyl180.470.40 AtlantaLow-eVinyl180.470.40 Las VegasLow-eVinyl180.470.40 Long BeachLow-eVinyl 16.5 *0.470.40 SacramentoLow-eVinyl 16.5 *0.470.45 BaltimoreLow-eVinyl180.470.55 BurlingtonLow-eVinyl180.330.55 * To follow Micropas example

27 Lighting & Appliances CityFl_lights*FrigdWashcFans Miami22/32eStar Houston20/32eStar --- Dallas20/32eStar --- Atlantastd --- Las Vegas20/32eStar --- Long Beachstd --- Sacramentostd --- Baltimorestd --- Burlingtonstd --- * high-efficiency fixtures / qualifying fixture locations

28 HVAC Equipment CityDuctsHeatingCooling MiamiInterior, tight*COP 1SEER 15 HoustonInterior, tight*HSPF 8.0SEER 14 DallasInterior, tight*HSPF 8.0SEER 14 AtlantaInterior, tight*HSPF 8.0SEER 14 Las VegasInterior, tight*HSPF 7.8SEER 14.5 Long BeachR-6 attic, tight*AFUE 80SEER 13 SacramentoR-6 attic, tight*AFUE 92SEER 13 BaltimoreInterior, tight*AFUE 94SEER 13 BurlingtonInterior, tight*AFUE 94SEER 13 * tight = tested to 3 cfm 25,out per 100 ft 2 conditioned area

29 Conclusions  Qualification not difficult in very mild climates  Window selection is important, with changes in SHGC making a significant difference, even in northern climates  Efficient lighting and appliances provide significant benefit in cooling dominated climates  Relatively “standard” envelope features can make the goal with only “moderate” increases in HVAC efficiencies if ducts are good  Tight ducts located in conditioned space provide significant benefit for both heating and cooling.

30 Tax Credit Software  Software providing for analysis for tax credit qualification available to anyone  Software for “certification” purposes is only available to IRS “certifiers”  ‘Try before You Buy’ Software is available online as a free downloadable at

31 Integrating Tax Incentives into Energy Efficiency Programs Rick Gerardi Director, Residential Programs NYSERDA

32 New Homes Planning on a “Better-Best” Strategy “Better” = New York ENERGY STAR ® Labeled Homes – core voluntary program - Continued training and technical assistance to builders - NY Incentives of $750- $1000 per home - 13% market share “ENERGY STAR Best of the Best” = tax credit-eligible homes and fulfill NYS requirements with additional specs - Additional training and technical assistance to builders and Raters - Combination of NY incentives and tax credit built into software - Targeted mid-stream marketing

33 Existing Homes Home Performance with ENERGY STAR ® –Program which promotes comprehensive retrofits to address comfort, health, safety and energy –Typically achieving 30% energy savings –$500 federal tax incentive a modest sweetener We will tell homeowners about Not a major part of promotion A performance-based incentive with higher incentives for high savings will better complement our program –E.g. as in the new Snowe-Feinstein bill –Software documentation of energy percentage savings

34 ENERGY STAR ® Labeled Products Planning a “best of the best” campaign to promote high-efficiency appliances and other products which exceed Energy Star criteria - Will better align with tax credit eligibility in 2006 In 2007, Energy Star and tax credits will align for clothes washers and dishwashers but not refrigerators - “Best of the best” will still be important for levels above ENERGY STAR

35 Moving Forward Tax incentive levels and structure should be reexamined as part of extension discussions –Restructuring particularly needed for existing homes ENERGY STAR should keep its specifications up- to-date –E.g. refrigerator specification needs updating “ENERGY STAR Best of the Best” to increase specification levels when a state exceeds its ENERGY STAR market transformation goals NY will continue fine-tuning programs to maximize savings and cost-effectiveness through market-based strategies

36 80 years of excellence Commercial Buildings Tax Deduction Ed Gray Director, Energy Infrastructure National Electrical Manufacturers Association

37 80 years of excellence Commercial Buildings Tax Deduction Provides for energy efficient systems deduction up to $1.80 per square foot for whole buildings using 50% less energy on a cost basis than a building designed to ASHRAE/IESNA 90.1-2001, as of April 2001. Or $0.60 per square foot for systems improvements proportional to 50% energy savings for a whole building. Systems include lighting, HVAC/water heating, and building envelope. There is a special provision for federal, state or local government owned buildings Asset owner gets the deduction Allowable for assets placed in service from 1/1/06 through 12/31/07 For government buildings, the person primarily responsible for the design gets the deduction Lighting systems have an interim provision, so that design doesn’t have to wait on IRS regulations Certified designers, software, and inspectors must be used

38 80 years of excellence Tax Rule Schedule IRS Notice 2006-52 includes self certification concept for design, software, inspection; forms showing technical basis to be retained by taxpayer, but not sent in with return Government buildings rules to be included in another Notice “Regulation” to be done later to include detailed rules “Certified” software likely to be available soon Interim lighting rules enable work to be done before regulations done Stakeholders need to review IRS work for potential comments

39 80 years of excellence IRS Clarified Issues International Revenue Service Notice 2006-52 contains guidance; corrected version in Internal Revenue Bulletin 2006-26 dated June 26, 2006 Certifier and inspector may be professional engineer or contractor licensed in the building’s jurisdiction Software to be self-certified, to be listed on DOE website Inspector cannot be an employee of asset owner

40 80 years of excellence Alternatives for Deduction 1.Whole building 50% energy cost reduction 2.Partial Deduction – Lighting Target 3.Partial Deduction – HVAC Target 4.Partial Deduction – Envelope Target 5.Interim Lighting Rules* using ASHRAE prescriptive lighting tables ( and *Interim Lighting Rules only in effect until final regulations are published in Federal Register, NEMA has requested that “interim” rule alternative be made permanent

41 80 years of excellence Whole Buildings Reference Building meets Standard 90.1 minimum requirements in the manner specified Performance Rating Method (PRM) used to determine energy and power cost reduction percentage of proposed building compared to reference building (50% and 16.7% targets) Baseline reference building performance uses PRM in Appendix G of ASHRAE Standard 90.1-2004 California Title 24 “ACM” requirements:  Internal loads (Tables N2-2 and N2-3)  Infiltration modeling (Section  Luminaire power from Appendix NB (or manufacturers data)

42 80 years of excellence 50% Below 90.1-2001 Buildings Achieved for a small number of existing buildings Additional systems in the Technical Explanation of the legislation are not in the IRS guidance (renewable on-site generation, daylighting, efficient wiring, and others) A high degree of systems integration; and careful site selection and orientation needed

43 80 years of excellence Typical Design Features Efficient envelope systems High performance glazing and selective orientation with solar control Daylighting High efficiency lighting and controls High efficiency HVAC and controls Ventilation control and heat recovery

44 80 years of excellence PRM Information ASHRAE Standard 90.1-2004 (on-line, read-only) 2005 California Title 24 Nonresidential Alternative Calculation Method (ACM) Approval Manual residential_acm/index.html residential_acm/index.html DOE list of approved software _2006.html NREL “Energy Savings Modeling and Inspection Guidelines for Commercial Building Federal Tax Deductions”

45 80 years of excellence EPAct 2005 System Deduction Provides for partial deduction for 3 major systems (lighting, HVAC/water heating, building envelope) that correspond to 50% reduction in building energy use IRS Notice 2006-52 states that 16.7% whole building savings are the system goal for each system Requires building modeling using certified software Software will be listed on a DOE website NEMA has commented that the reference building, from a lighting perspective, need only be based on the space use, LPD and square feet; it is not necessary to develop site specific references for lighting

46 80 years of excellence System Deduction IRS decision of 1/3 split means 16.7% energy cost reduction for each system (1/3 of 50%) Retail example using “custom targets”:  Envelope: 22% of cost; 11% savings target  Lighting: 28% of cost; 14% savings target  Mechanical: 50% of cost; 25% savings target One-third split targets may be hard to meet

47 80 years of excellence Interim Lighting Provision Until such time that final IRS rules are promulgated, lighting systems are eligible for a partial deduction. Key provisions: Deduction is $0.30 to $0.60 for 25 to 40% under ASHRAE LPDs, respectively, from Table or “Use it or lose it” allowances are not to be considered in the LPD reduction Warehouses must be 50% under to get $0.60 (no sliding scale) ASHRAE controls + “bi-level switching” required Industry has asked that provision be made permanent as the lighting system deduction

48 80 years of excellence Continuing Actions Convene technical stakeholders group to resolve details of ASHRAE vs. California methods and reference building Extend tax provision (several bills already introduced in Congress) Determine if other provisions need legislative solutions Continue promotional program

49 80 years of excellence Further Information commercial-bldgs.html

50 Therese Langer ACEEE Transportation Program July 21, 2006 Vehicle Tax Incentives TIAP Webcast

51 Efficient vehicle incentives: Light-duty Consumer tax credit of up to $3400 for hybrids and diesels Based on fuel economy and lifetime fuel savings of vehicle relative to average in weight class Must meet threshold for emissions After a manufacturer sells 60,000 vehicles, credit amounts begin to decline

52 Efficient vehicle credits: heavy-duty Gross vehicle weight (GVW) rating Maximum qualified incremental cost 8,501-14,000 pounds$7,500 14,001-26,000 pounds$15,000 > 26,000 pounds$30,000 Improvement in city fuel economy Hybrid credit as percent of qualified incremental cost At least 30% and under 40%20% At least 40% and under 50%30% At least 50%40%

53 Status of market – light-duty Hybrids –11 eligible vehicles, gaining up to 93% of maximum credit –None available in certain classes (e.g. pickup) –Sales about ~ 1% of the market –One manufacturer has already hit 60,000-vehicle threshold, no others will meet this year Diesels –Not clean enough (yet) –First one slated for release this year Fuel cell vehicles –None commercially available

54 Light-duty hybrid sales Calendar Year:2003200420052006 YTDCumulative Honda Insight 1,168 583 666 489 13,653 Toyota Prius 24,627 53,991 108,077 48,156 276,088 Honda Civic Hybrid - 25,571 25,774 15,755 67,100 Ford Escape Hybrid/Mariner Hybrid - 2,993 15,719 11,996 30,708 Honda Accord Hybrid - 1,061 16,826 3,245 21,132 Lexus RX 400h - - 20,661 11,193 31,854 Toyota Highlander Hybrid - - 17,954 18,109 36,063 Toyota Camry Hybrid - - - 7,386 Lexus GS 450h - - - 666 Total: 25,795 84,199 205,677 116,995 484,650

55 Status of market – heavy-duty Except for transit buses, all candidate vehicles in pre-production stages Incentives could make a big difference in the HD market, but –Incentives may not be large enough –Timing is not quite right Test procedures allowing vehicles to gain credits still under development

56 Fleet issues For tax-paying entities: Alternative Minimum Tax, sufficient tax liability For tax-exempt entities: seller gets the credit but must divulge amount to buyer –Will seller pass on credit? –Can seller take advantage? Availability of credit information relative to purchase cycle

57 Fleet issues (cont.) For heavy-duty, most purchasers will be fleets and many, tax-exempt First hybrid applications identified: transit buses, delivery trucks, waste haulers, and utility trucks “Seller” will typically be the manufacturer; how does this affect efficacy of the credits?

58 Next steps Light-duty –Find out how credits influence manufacturer production plans and in particular what limits domestic manufacturers’ interest –Improve fleet access to hybrids and test mechanism to accommodate tax-exempt purchasers and leasing

59 Next steps (cont.) Heavy-duty –Expedite test procedure adoption to reduce uncertainty re credit availability –Resolve tax-exempt, AMT issues –Extend credits?

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