Property & The Law: What Does Green Mean to Your Tax Dollar?

At the federal level, corporations and individuals are eligible for credits and deductions for engaging in certain activities. For businesses, here are some of the potential tax benefits available:

• Commercial building owners may be eligible for deductions relating to installation of interior lighting; certain roofing and insulation; or heating, cooling, ventilation or hot water systems as part of a plan to reduce the total annual energy and power costs, as long as the systems meet certain minimum standards.
• Builders producing energy efficient homes may be eligible for a credit of $1,000 to $2,000 per home, depending on the level of energy savings and the type of home.
• Manufacturers who produce energy efficient appliances (e.g., washing machines, refrigerators and dishwashers) are eligible for a tax credit to a whopping maximum of $75 million. The credit is calculated based on the number of appliances produced and the level of efficiency compared to a baseline amount.
• Finally, corporations producing and selling renewable electricity through the use of qualified energy resources such as solar energy, wind and hydropower production may be eligible for a credit based on the number of kilowatts produced.

• Virtually every state has a set of incentives that are similar to the federal rules. A few examples:

• New York offers a corporate tax credit for owners and tenants who maintain buildings and tenant spaces that meet certain "green" standards. The credit is allowable to a maximum of $2 million per building, and is distributed over a period of five years.
• New Jersey focuses primarily on incentives for business, including a homebuilder's credit for Energy Star appliances purchased in connection with homebuilding, a sales tax exemption for acquired solar and wind energy equipment and several other similar rebates and loans.
• California has a number of incentives available at both the state and municipal level, ranging from direct investment credits to utility rebates, loans and grants.

  Many benefits are available to taxpayers from the federal government and various states in the form of tax reductions, credits and incentives. These encompass individual benefits and benefits to business.

Some of the credits available to individuals include the following:

• Individuals may be eligible to receive a credit up to $500 for replacing certain building components on their existing residence, including roofing, exterior windows and insulation.
• New and improved hybrid car incentives offer a direct credit ranging from $650 to $3,150 depending on the type of car purchased.
• Individuals who spend money on qualified solar electric property, solar water heating property and qualified fuel cell property may be eligible for 30% direct credit against their income tax to a maximum of $2,000.
• Finally, energy-efficient mortgages can be used to finance a variety of energy saving measures, including renewable energy technologies, in a new or existing home.

The savings involved in these provisions can be substantial, and provide an added incentive for taxpayers to do the right thing for the environment. Note that some of these credits do not reduce the alternative minimum tax, so taxpayers need to be careful not to get whipsawed in the process of trying to save a tax buck.

Elizabeth Gillon is managing director of tax services for Smart Business Advisory and Consulting, based in the firm's New York City office.

The views expressed in this article are those of the author and not Real Estate Media or its publications.