2021 Sustainable Building Tax Credit (Personal)

Summary

Commercial Buildings

Commercial buildings which have been registered and certified by the U.S. Green Building Council at LEED Gold or higher for new construction (NC), existing buildings (EB), core and shell (CS), or commercial interiors (CI), and are broadband- and electric vehicle-ready are eligible for a tax credit. The amount of the credit varies according to the square footage of the building, the level of certification achieved, and if it's affordable/low-income housing. Additional tax credit can be received if a commercial building is fully electric or certified zero-carbon, energy, waste, or water. Exact credit rates can be found through the program website.

Renovated commercial buildings can receive a flat credit rate of $2.25/sq.ft if the building: 1) was renovated at least 10 years after construction, 2) is over 20,000 square feet, and 3) is broadband- and electric vehicle-ready; the maximum receivable credit is $150,000 per renovation. In existing commercial buildings that are less than 20,000 square feet and are broadband-ready, tax credit can also be received for the installation of energy-saving technologies.

Residential Buildings

Residential buildings certified as sustainable homes can also qualify for a tax credit. Eligible residential buildings include single-family homes and multi-family homes which are certified as either Build Green Gold or higher, LEED-H Gold or higher, or are Energy Star-certified manufactured homes; residential buildings must also be broadband- and electric vehicle-ready. The amount of the credit varies according to the square footage of the building, the level of certification achieved, and if it's affordable/low-income housing. Additional tax credit can be received if a residential building is fully electric or certified zero-carbon, energy, waste, or water.  In existing residential buildings, tax credit can also be received for the installation of energy-saving technologies. Exact credit rates can be found through the program website.

Applying for the Tax Credit

To receive the tax credit, the building owner must obtain a certificate of eligibility from the Energy, Minerals and Natural Resources Department after the building project has been completed (the project being either construction, renovation, or technology installation). The Department will only grant certificates in any given calendar year until the equivalent of $1,000,000 worth of certificates for newly constructed commercial buildings; $2,000,000 worth of certificates for newly constructed residential buildings that are not manufactured housing; $250,000 worth of certificates for newly constructed residential buildings that are manufactured housing; $1,000,000 worth of certificates for renovated commercial buildings; and $2,900,000 worth of certificates for energy-saving technology installation in both commercial and residential buildings combined have been awarded in that calendar year. If the aggregate limit for any type of sustainable building is not met, the leftover limit can be moved over to another type that has already reached its limit within that year; leftovers cannot be carried forward to another year.

Payout Schedule and Carry Forward

The taxpayer must then present their certificate of eligibility to the Taxation and Revenue Department to receive a document granting the Sustainable Building Tax Credit. If the total amount of a Sustainable Building Tax Credit is less than $100,000, a maximum of $25,000 can be applied to the taxpayer's income tax in that year and the next 3 years as needed depending on the amount of the credit. If the credit is more than $100,000, the taxpayer can claim the credit in increments of 25% in each of the 4 taxable years, including the year in which the credit is approved. If a taxpayer's tax liability is less than the amount of credit due, the excess credit may be carried forward for up to 7 years.

Transferability

The tax credit is transferable for nonprofits. Although nonprofits are not taxed by the state, they can apply for the certificate of eligibility and sell the credit to an entity that does pay taxes. Additionally, people and entities who do not owe enough taxes to take full advantage of the tax credit also have the option of selling the tax credit.

Other Tax Credits

A solar thermal system or a photovoltaic system may not be used as a component of qualification for this tax credit if a tax credit has already been claimed for it under the Solar Market Development Tax Credit.