Allows a deduction for energy efficient commercial property expenditures.
[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1459 Introduced in House (IH)]
108th CONGRESS
1st Session
H. R. 1459
To amend the Internal Revenue Code of 1986 to provide tax credits for
making energy efficiency improvements to existing homes and for
constructing new energy efficient homes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 27, 2003
Mr. Weller (for himself, Mr. Cardin, and Mr. Foley) introduced the
following bill; which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide tax credits for
making energy efficiency improvements to existing homes and for
constructing new energy efficient homes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
(a) Short Title.--This Act may be cited as the ``Save America's
Valuable Energy Resources Act of 2003''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
SEC. 2. CREDIT FOR ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.
(a) In General.--Subpart A of part IV of subchapter A of chapter 1
(relating to nonrefundable personal credits) is amended by inserting
after section 25B the following new section:
``SEC. 25C. ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.
``(a) Allowance of Credit.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to 20 percent of the amount paid
or incurred by the taxpayer for qualified energy efficiency
improvements installed during such taxable year.
``(b) Limitations.--
``(1) Maximum credit.--The credit allowed by this section
with respect to a dwelling shall not exceed $2,000.
``(2) Prior credit amounts for taxpayer on same dwelling
taken into account.--If a credit was allowed to the taxpayer
under subsection (a) with respect to a dwelling in 1 or more
prior taxable years, the amount of the credit otherwise
allowable for the taxable year with respect to that dwelling
shall not exceed the amount of $2,000 reduced by the sum of the
credits allowed under subsection (a) to the taxpayer with
respect to the dwelling for all prior taxable years.
``(3) Limitation based on amount of tax.--The credit
allowed under subsection (a) for the taxable year shall not
exceed the excess of--
``(A) the sum of the regular tax liability (as
defined in section 26(b)) plus the tax imposed by
section 55, over
``(B) the sum of the credits allowable under this
subpart (other than this section and section 23) and
section 27 for the taxable year.
``(c) Carryforward of Unused Credit.--If the credit allowable under
subsection (a) exceeds the limitation imposed by subsection (b)(3) for
such taxable year, such excess shall be carried to the succeeding
taxable year and added to the credit allowable under subsection (a) for
such succeeding taxable year.
``(d) Qualified Energy Efficiency Improvements.--For purposes of
this section, the term `qualified energy efficiency improvements' means
any energy efficient building envelope component which meets the
prescriptive criteria for such component established by the 1998
International Energy Conservation Code, if--
``(1) such component is installed in or on a dwelling--
``(A) located in the United States, and
``(B) owned and used by the taxpayer as the
taxpayer's principal residence (within the meaning of
section 121),
``(2) the original use of such component commences with the
taxpayer, and
``(3) such component reasonably can be expected to remain
in use for at least 5 years.
If the aggregate cost of such components with respect to any dwelling
exceeds $1,000, such components shall be treated as qualified energy
efficiency improvements only if such components are also certified in
accordance with subsection (e) as meeting such criteria.
``(e) Certification.--The certification described in subsection (d)
shall be--
``(1) determined on the basis of the technical
specifications or applicable ratings (including product
labeling requirements) for the measurement of energy
efficiency, based upon energy use or building envelope
component performance, for the energy efficient building
envelope component,
``(2) provided by a local building regulatory authority, a
utility, a manufactured home production inspection primary
inspection agency (IPIA), or an accredited home energy rating
system provider who is accredited by or otherwise authorized to
use approved energy performance measurement methods by the Home
Energy Ratings Systems Council or the National Association of
State Energy Officials, and
``(3) made in writing in a manner that specifies in readily
verifiable fashion the energy efficient building envelope
components installed and their respective energy efficiency
levels.
``(f) Definitions and Special Rules.--
``(1) Tenant-stockholder in cooperative housing
corporation.--In the case of an individual who is a tenant-
stockholder (as defined in section 216) in a cooperative
housing corporation (as defined in such section), such
individual shall be treated as having paid his tenant-stockholder's
proportionate share (as defined in section 216(b)(3)) of the cost of
qualified energy efficiency improvements made by such corporation.
``(2) Condominiums.--
``(A) In general.--In the case of an individual who
is a member of a condominium management association
with respect to a condominium which he owns, such
individual shall be treated as having paid his
proportionate share of the cost of qualified energy
efficiency improvements made by such association.
``(B) Condominium management association.--For
purposes of this paragraph, the term `condominium
management association' means an organization which
meets the requirements of paragraph (1) of section
528(c) (other than subparagraph (E) thereof) with
respect to a condominium project substantially all of
the units of which are used as residences.
``(3) Building envelope component.--The term `building
envelope component' means insulation material or system which
is specifically and primarily designed to reduce the heat loss
or gain of a dwelling when installed in or on such dwelling,
exterior windows (including skylights) and doors, and metal
roofs with appropriate pigmented coatings which are
specifically and primarily designed to reduce the heat gain of
a dwelling when installed in or on such dwelling.
``(4) Manufactured homes included.--For purposes of this
section, the term `dwelling' includes a manufactured home which
conforms to Federal Manufactured Home Construction and Safety
Standards (24 CFR 3280).
``(g) Basis Adjustment.--For purposes of this subtitle, if a credit
is allowed under this section for any expenditure with respect to any
property, the increase in the basis of such property which would (but
for this subsection) result from such expenditure shall be reduced by
the amount of the credit so allowed.
``(h) Application of Section.--This section shall apply to
qualified energy efficiency improvements installed after December 31,
2002 and before January 1, 2008.''.
(b) Conforming Amendments.--
(1) Subsection (a) of section 1016 is amended by striking
``and'' at the end of paragraph (27), by striking the period at
the end of paragraph (28) and inserting ``, and'', and by
adding at the end the following new paragraph:
``(29) to the extent provided in section 25C(g), in the
case of amounts with respect to which a credit has been allowed
under section 25C.''.
(2) The table of sections for subpart A of part IV of
subchapter A of chapter 1 is amended by inserting after the
item relating to section 25B the following new item:
``Sec. 25C. Energy efficiency
improvements to existing
homes.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years ending after December 31, 2002.
SEC. 3. BUSINESS CREDIT FOR CONSTRUCTION OF NEW ENERGY EFFICIENT HOME.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
(relating to business related credits) is amended by inserting after
section 45F the following new section:
``SEC. 45G. NEW ENERGY EFFICIENT HOME CREDIT.
``(a) In General.--For purposes of section 38, in the case of an
eligible contractor, the credit determined under this section for the
taxable year is an amount equal to the aggregate adjusted bases of all
energy efficient property installed in a qualified new energy efficient
home during construction of such home.
``(b) Limitations.--
``(1) Maximum credit.--
``(A) In general.--The credit allowed by this
section with respect to a dwelling shall not exceed
$2,000.
``(B) Prior credit amounts on same dwelling taken
into account.--If a credit was allowed under subsection
(a) with respect to a dwelling in 1 or more prior
taxable years, the amount of the credit otherwise
allowable for the taxable year with respect to that
dwelling shall not exceed the amount of $2,000 reduced
by the sum of the credits allowed under subsection (a)
with respect to the dwelling for all prior taxable
years.
``(2) Coordination with rehabilitation and energy
credits.--For purposes of this section--
``(A) the basis of any property referred to in
subsection (a) shall be reduced by that portion of the
basis of any property which is attributable to
qualified rehabilitation expenditures (as defined in
section 47(c)(2)) or to the energy percentage of energy
property (as determined under section 48(a)), and
``(B) expenditures taken into account under either
section 47 or 48(a) shall not be taken into account
under this section.
``(c) Definitions.--For purposes of this section--
``(1) Eligible contractor.--The term `eligible contractor'
means the person who constructed the new energy efficient home,
or in the case of a manufactured home which conforms to Federal
Manufactured Home Construction and Safety Standards (24 CFR
3280), the manufactured home producer of such home.
``(2) Energy efficient property.--The term `energy
efficient property' means any energy efficient building
envelope component, and any energy efficient heating or cooling
appliance.
``(3) Qualified new energy efficient home.--The term
`qualified new energy efficient home' means a dwelling--
``(A) located in the United States,
``(B) the construction of which is substantially
completed after December 31, 2002,
``(C) the original use of which is as a principal
residence (within the meaning of section 121) which
commences with the person who acquires such dwelling
from the eligible contractor, and
``(D) which is certified to have a level of annual
heating and cooling energy consumption that is at least
30 percent below the annual level of heating and
cooling energy consumption of a comparable dwelling
constructed in accordance with the standards of the
1998 International Energy Conservation Code and to have
building envelope component improvements account for
\1/3\ of such 30 percent.
``(4) Construction.--The term `construction' includes
reconstruction and rehabilitation.
``(5) Acquire.--The term `acquire' includes purchase and,
in the case of reconstruction and rehabilitation, such term
includes a binding written contract for such reconstruction or
rehabilitation.
``(6) Building envelope component.--The term `building
envelope component' means insulation material or system which
is specifically and primarily designed to reduce the heat loss
or gain of a dwelling when installed in or on such dwelling,
exterior windows (including skylights) and doors, and metal
roofs with appropriate pigmented coatings which are
specifically and primarily designed to reduce the heat gain of
a dwelling when installed in or on such dwelling.
``(7) Manufactured home included.--The term `dwelling'
includes a manufactured home conforming to Federal Manufactured
Home Construction and Safety Standards (24 CFR 3280).
``(d) Certification.--
``(1) Method.--A certification described in subsection
(c)(3)(D) shall be determined on the basis of one of the
following methods:
``(A) The technical specifications or applicable
ratings (including product labeling requirements) for
the measurement of energy efficiency for the energy
efficient building envelope component or energy
efficient heating or cooling appliance, based upon
energy use or building envelope component performance.
``(B) An energy performance measurement method that
utilizes computer software approved by organizations
designated by the Secretary.
``(2) Provider.--Such certification shall be provided by--
``(A) in the case of a method described in
paragraph (1)(A), a local building regulatory
authority, a utility, a manufactured home production
inspection primary inspection agency (IPIA), or an
accredited home energy rating systems provider who is
accredited by, or otherwise authorized to use, approved
energy performance measurement methods by the Home
Energy Ratings Systems Council or the National
Association of State Energy Officials, or
``(B) in the case of a method described in
paragraph (1)(B), an individual recognized by an
organization designated by the Secretary for such
purposes.
``(3) Form.--Such certification shall be made in writing in
a manner that specifies in readily verifiable fashion the
energy efficient building envelope components and energy
efficient heating or cooling appliances installed and their
respective energy efficiency levels, and in the case of a
method described in subparagraph (B) of paragraph (1),
accompanied by written analysis documenting the proper
application of a permissible energy performance measurement
method to the specific circumstances of such dwelling.
``(4) Regulations.--
``(A) In general.--In prescribing regulations under
this subsection for energy performance measurement
methods, the Secretary shall prescribe procedures for
calculating annual energy costs for heating and cooling
and cost savings and for the reporting of the results.
Such regulations shall--
``(i) be based on the National Home Energy
Rating Technical Guidelines of the National
Association of State Energy Officials, the Home
Energy Rating Guidelines of the Home Energy
Rating Systems Council, or the modified 1998
California Residential ACM manual,
``(ii) provide that any calculation
procedures be developed such that the same
energy efficiency measures allow a home to
qualify for the credit under this section
regardless of whether the house uses a gas or
oil furnace or boiler or an electric heat pump,
and
``(iii) require that any computer software
allow for the printing of the Federal tax forms
necessary for the credit under this section and
explanations for the homebuyer of the energy
efficient features that were used to comply
with the requirements of this section.
``(B) Providers.--For purposes of paragraph (2)(B),
the Secretary shall establish requirements for the
designation of individuals based on the requirements
for energy consultants and home energy raters specified
by the National Association of State Energy Officials.
``(e) Basis Adjustment.--For purposes of this subtitle, if a credit
is allowed under this section for any expenditure with respect to any
property, the increase in the basis of such property which would (but
for this subsection) result from such expenditure shall be reduced by
the amount of the credit so allowed.
``(f) Application of Section.--Subsection (a) shall apply to
dwellings purchased during the period beginning on January 1, 2003, and
ending on December 31, 2007.''.
(b) Credit Made Part of General Business Credit.--Subsection (b) of
section 38 (relating to current year business credit) is amended by
striking ``plus'' at the end of paragraph (14), by striking the period
at the end of paragraph (15) and inserting ``, plus'', and by adding at
the end thereof the following new paragraph:
``(16) the new energy efficient home credit determined
under section 45G.''.
(c) Denial of Double Benefit.--Section 280C (relating to certain
expenses for which credits are allowable) is amended by adding at the
end thereof the following new subsection:
``(d) New Energy Efficient Home Expenses.--No deduction shall be
allowed for that portion of expenses for a new energy efficient home
otherwise allowable as a deduction for the taxable year which is equal
to the amount of the credit determined for such taxable year under
section 45G.''.
(d) Limitation on Carryback.--Subsection (d) of section 39 is
amended by adding at the end the following new paragraph:
``(11) No carryback of new energy efficient home credit
before effective date.--No portion of the unused business
credit for any taxable year which is attributable to the credit
determined under section 45G may be carried back to any taxable
year ending before January 1, 2003.''.
(e) Deduction for Certain Unused Business Credits.--Subsection (c)
of section 196 is amended by striking ``and'' at the end of paragraph
(9), by striking the period at the end of paragraph (10) and inserting
``, and'', and by adding after paragraph (10) the following new
paragraph:
``(11) the new energy efficient home credit determined
under section 45G.''.
(f) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 is amended by inserting after the
item relating to section 45F the following new item:
``Sec. 45G. New energy efficient home
credit.''.
(g) Effective Date.--The amendments made by this section shall
apply to taxable years ending after December 31, 2002.
SEC. 4. ALLOWANCE OF DEDUCTION FOR ENERGY EFFICIENT COMMERCIAL BUILDING
PROPERTY.
(a) In General.--Part VI of subchapter B of chapter 1 (relating to
itemized deductions for individuals and corporations) is amended by
inserting after section 179A the following new section:
``SEC. 179B. DEDUCTION FOR ENERGY EFFICIENT COMMERCIAL BUILDING
PROPERTY.
``(a) Allowance of Deduction.--
``(1) In general.--There shall be allowed as a deduction an
amount equal to energy efficient commercial building property
expenditures made by a taxpayer for the taxable year.
``(2) Maximum amount of deduction.--The amount of energy
efficient commercial building property expenditures taken into
account under paragraph (1) shall not exceed an amount equal to
the product of--
``(A) $2.25, and
``(B) the square footage of the building with
respect to which the expenditures are made.
``(3) Year deduction allowed.--The deduction under
paragraph (1) shall be allowed for the taxable year in which
the building is placed in service.
``(b) Energy Efficient Commercial Building Property Expenditures.--
For purposes of this section, the term `energy efficient commercial
building property expenditures' means an amount paid or incurred for
energy efficient commercial building property installed on or in
connection with new construction or reconstruction of property--
``(1) for which depreciation is allowable under section
167,
``(2) which is located in the United States, and
``(3) the construction or erection of which is completed by
the taxpayer.
Such property includes all residential rental property, including low-
rise multifamily structures and single family housing property which is
not within the scope of Standard 90.1-1999 (described in subsection
(c)). Such term includes expenditures for labor costs properly
allocable to the onsite preparation, assembly, or original installation
of the property.
``(c) Energy Efficient Commercial Building Property.--For purposes
of subsection (b)--
``(1) In general.--The term `energy efficient commercial
building property' means any property which reduces total
annual energy and power costs with respect to the lighting,
heating, cooling, ventilation, and hot water supply systems of
the building by 50 percent or more in comparison to a reference
building which meets the requirements of Standard 90.1-1999 of
the American Society of Heating, Refrigerating, and Air
Conditioning Engineers and the Illuminating Engineering Society
of North America using methods of calculation under paragraph
(2) and certified by qualified professionals as provided under
subsection (f).
``(2) Methods of calculation.--The Secretary, in
consultation with the Secretary of Energy, shall promulgate
regulations which describe in detail methods for calculating
and verifying energy and power consumption and cost, taking
into consideration the provisions of the 1998 California
Nonresidential ACM Manual. These procedures shall meet the
following requirements:
``(A) In calculating tradeoffs and energy
performance, the regulations shall prescribe the costs
per unit of energy and power, such as kilowatt hour,
kilowatt, gallon of fuel oil, and cubic foot or Btu of
natural gas, which may be dependent on time of usage.
``(B) The calculational methodology shall require
that compliance be demonstrated for a whole building.
If some systems of the building, such as lighting, are
designed later than other systems of the building, the
method shall provide that either--
``(i) the expenses taken into account under
subsection (a) shall not occur until the date
designs for all energy-using systems of the
building are completed,
``(ii) the energy performance of all
systems and components not yet designed shall
be assumed to comply minimally with the
requirements of such Standard 90.1-1999, or
``(iii) the expenses taken into account
under subsection (a) shall be a fraction of
such expenses based on the performance of less
than all energy-using systems in accordance
with subparagraph (C).
``(C) The expenditures in connection with the
design of subsystems in the building, such as the
envelope, the heating, ventilation, air conditioning
and water heating system, and the lighting system shall
be allocated to the appropriate building subsystem
based on system-specific energy cost savings targets in
regulations promulgated by the Secretary of Energy
which are equivalent, using the calculation
methodology, to the whole building requirement of 50
percent savings.
``(D) The calculational methods under this
subparagraph need not comply fully with section 11 of
such Standard 90.1-1999.
``(E) The calculational methods shall be fuel
neutral, such that the same energy efficiency features
shall qualify a building for the deduction under this
subsection regardless of whether the heating source is
a gas or oil furnace or an electric heat pump.
``(F) The calculational methods shall provide
appropriate calculated energy savings for design
methods and technologies not otherwise credited in
either such Standard 90.1-1999 or in the 1998
California Nonresidential ACM Manual, including the
following:
``(i) Natural ventilation.
``(ii) Evaporative cooling.
``(iii) Automatic lighting controls such as
occupancy sensors, photocells, and timeclocks.
``(iv) Daylighting.
``(v) Designs utilizing semi-conditioned
spaces that maintain adequate comfort
conditions without air conditioning or without
heating.
``(vi) Improved fan system efficiency,
including reductions in static pressure.
``(vii) Advanced unloading mechanisms for
mechanical cooling, such as multiple or
variable speed compressors.
``(viii) The calculational methods may take
into account the extent of commissioning in the
building, and allow the taxpayer to take into
account measured performance that exceeds
typical performance.
``(3) Computer software.--
``(A) In general.--Any calculation under this
subsection shall be prepared by qualified computer
software.
``(B) Qualified computer software.--For purposes of
this paragraph, the term `qualified computer software'
means software--
``(i) for which the software designer has
certified that the software meets all
procedures and detailed methods for calculating
energy and power consumption and costs as
required by the Secretary,
``(ii) which provides such forms as
required to be filed by the Secretary in
connection with energy efficiency of property
and the deduction allowed under this section,
and
``(iii) which provides a notice form which
summarizes the energy efficiency features of
the building and its projected annual energy
costs.
``(d) Allocation of Deduction for Public Property.--In the case of
energy efficient commercial building property installed on or in public
property, the Secretary shall promulgate a regulation to allow the
allocation of the deduction to the person primarily responsible for
designing the property in lieu of the public entity which is the owner
of such property. Such person shall be treated as the taxpayer for
purposes of this section.
``(e) Notice to Owner.--The qualified individual shall provide an
explanation to the owner of the building regarding the energy
efficiency features of the building and its projected annual energy
costs as provided in the notice under subsection (c)(3)(B)(iii).
``(f) Certification.--The Secretary, in consultation with the
Secretary of Energy, shall establish requirements for certification and
compliance procedures similar to the procedures under section 45G(d).
``(g) Basis Reduction.--For purposes of this title, the basis of
any property shall be reduced by the amount of the deduction with
respect to such property which is allowed by subsection (a).
``(h) Termination.--This section shall not apply to property placed
in service after December 31, 2007.''.
(b) Conforming Amendments.--
(1) Section 1016(a) is amended by striking ``and'' at the
end of paragraph (28), by striking the period at the end of
paragraph (29) and inserting ``, and'', and by inserting the
following new paragraph:
``(30) to the extent provided in section 179B(g).''.
(2) Section 1245(a) is amended by inserting ``179B,'' after
``179A,'' both places it appears in paragraphs (2)(C) and
(3)(C).
(3) Section 1250(b)(3) is amended by inserting before the
period at the end of the first sentence ``or by section 179B''.
(4) Section 263(a)(1) is amended by striking ``or'' at the
end of subparagraph (G), by striking the period at the end of
subparagraph (H) and inserting ``, or'', and by inserting after
subparagraph (H) the following new subparagraph:
``(I) expenditures for which a deduction is allowed
under section 179B.''.
(5) Section 312(k)(3)(B) is amended by striking ``or 179A''
each place it appears in the heading and text and inserting ``,
179A, or 179B''.
(c) Clerical Amendment.--The table of sections for part VI of
subchapter B of chapter 1 is amended by adding after section 179A the
following new item:
``Sec. 179B. Deduction for energy
efficient commercial building
property.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2002.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
Llama 3.2 · runs locally in your browser
Ask anything about this bill. The AI reads the full text to answer.
Enter to send · Shift+Enter for new line