Income Tax Credit for Green Buildings (Personal)

Summary

Note: As of October 2011 the Maryland Energy Administration indicates that project cancellations have resulted in the availability of $13 million for new tax credit applications.

Enacted in 2001, this income tax credit applies to non-residential and residential multifamily buildings of at least 20,000 square feet that are constructed or rehabilitated to meet criteria set forth by the U.S. Green Building Council or other similar criteria. Newly constructed buildings must be located on a qualified brownfield site, or in a priority funding area, and not in a wetlands area. Building rehabilitation projects are eligible if they do not increase the size of the building by 25%, or if they are located in a priority funding area.

Credits apply to three types of alternative energy sources: photovoltaics (PV), wind turbines and fuel cells. Tax credits for alternate energy sources can only be claimed if they serve a green whole building, a green base building, or green tenant space.

The tax credit amounts are as follows:

• 20% of the incremental cost for building-integrated photovoltaics
• 25% of the incremental cost for non-building-integrated photovoltaics
• 30% of the costs, including installation, for a fuel cell
• Allowable costs cannot exceed $3 per watt for PV or $1,000 per kilowatt (kW) for fuel cells
• 25% of the costs, including installation, for a wind turbine;
• 6% of the allowable costs for the construction of or rehabilitation to a green base building or green tenant space;
• 8% of the allowable costs for the construction or rehabilitation of a green whole building.
• Allowable costs cannot exceed $120 per square foot in the case of a whole building or base building and $60 per square foot in the case of green tenant space.

Credits will be allowed for amounts spent on or after July 1, 2001, and will be available for tax years beginning after December 31, 2002. Applicants must apply to the Maryland Energy Administration (MEA) to receive an initial credit certificate. This certificate will indicate the earliest taxable year that the credit may be claimed and an expiration date. Any unused credit may be carried forward and applied for succeeding taxable years for up to 10 years. There are some further restrictions on eligibility, annual caps on the total number of credits allowed, and an aggregate credit cap of $25 million. While initial credit certificates meeting the overall $25 million cap where authorized from 2001 - 2005, as of October 2011 project cancellations had made $13 million available for new applications. The tax credit is scheduled to sunset on December 31, 2011, after which point no new initial credit certificates may be issued.