October 2005 News Update

Business Incentives Included in the 2005 Energy Act
The Energy Tax Incentive Act of 2005 provides tax incentives for builders of energy efficient homes, commercial building developers, and manufacturers of appliances, as shown below.

Credit for Builders of Energy Efficient New Homes: Contractors that build new energy-efficient homes in the U.S. are eligible for a credit of $2,000 per housing unit. To qualify, the unit must have annual energy consumption for heating and cooling that is at least 50% less than comparable units. The credit can also apply to a substantial reconstruction and rehabilitation of an existing home. These credits only apply to homes sold by contractors for use as personal residences. Construction must be substantially completed after August 8, 2005, and the home must be purchased after 12/31/05 and before 2008. This credit will benefit consumers to the extent contractors pass along their tax savings.

Deduction for Energy Efficient Commercial Building Improvements: An immediate deduction (as opposed to multiyear depreciation) is allowed for the cost of qualified energy-saving improvements to commercial buildings in the U.S. The maximum deduction is generally limited to $1.80 per square foot on a lifetime basis. The improvements must be installed as part of interior lighting systems; heating, cooling, and ventilation systems; hot water systems; or the building envelope. To qualify, the improvements must meet a 50% reduced energy consumption standard. In some circumstances, a reduced deduction amount of $.60 per square foot may apply. The deduction is available for qualified energy-efficient commercial building property placed in service after 12/31/05 and before 2008.

Credit for Manufacturers of Energy-Efficient Appliances: Manufacturers are allowed a business tax credit for the manufacture of qualifying energy-efficient dishwashers, clothes washers, and refrigerators in the U.S. The credit is available for appliances manufactured after 12/31/05 and before 2008. This credit goes directly to the appliance manufacturers, and consumers will only benefit to the extent manufacturers pass along their tax savings.

Please call us to discuss the potential to reduce your business' taxes using these new incentives.