Expansion of new energy efficient home credit

(a)

In general

Paragraph (2) of section 45L(a) of the Internal Revenue Code of 1986 is amended by striking and at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting , and, and by adding at the end the following:

(C)in lieu of subparagraphs (A) and (B), in the case of qualified new energy efficient home that is a qualified energy efficient residential rental property, 3.3 percent of the cost of construction of such property, reduced by any expenditure not taken into account under this section by reason of subsection (f).

(b)

Qualified energy efficient residential rental property defined

Subsection (b) of section 45L of such Code is amended by adding at the end the following:

(5)

Qualified energy efficient residential rental property

(A)

In general

The term qualified energy efficient residential real property means a building which is residential rental property which is described in subparagraph (B), (C), or (D). (B)

New or reconstructed building

A building is described in this subparagraph if— (i)the certification requirements of subparagraph (E) with respect to the building are met, (ii)the original use of which commences with the taxpayer, and (iii)the building is placed in service after the date of the enactment of the Building Efficiently Act of 2018. (C)

Improvements to existing building

A building is described in this subparagraph if, only after improvements are made to the building— (i)the certification requirements of subparagraph (E) with respect to the building are met, (ii)the original use of the improved building commences with the taxpayer, (iii)the improved building is placed in service after the date of the enactment of the Building Efficiently Act of 2018, and (iv)the taxpayer elects to the application of this paragraph with respect to the building. (D)

Buildings acquired by purchase

A building is described in this subparagraph if the building— (i)is acquired by purchase from an unrelated person, (ii)meets the certification requirements of subparagraph (E), and (iii)is placed in service after the date of the enactment of the Building Efficiently Act of 2018. (E)

Certification requirements

The requirements of this subparagraph are met if, with respect to a building, the building is certified in accordance with subsection (d) as being constructed, reconstructed, or retrofitted, as the case may be, under a plan designed to reduce energy and power consumption of the building by 40 percent or more in comparison to— (i)in the case of retrofits made to an existing building, the baseline annual energy and power consumption of the building, or (ii)in any other case, a reference building which meets the minimum requirements of the International Energy Conservation Code 2004 using methods of calculation under subsection (d). (F)

Baseline annual energy and power consumption

The baseline annual energy and power consumption of any building shall be determined by using— (i)a building energy performance benchmarking tool designated for purposes of this paragraph by the Administrator of the Environmental Protection Agency, which is based upon energy and power consumption data during the 1-year period ending on the date on which retrofits under the plan are placed in service, or (ii)such other methods of calculation as certified by the Secretary in accordance with subsection (d). (G)

Related persons

For purposes of subparagraph (D), a person is related to another person if— (i)the persons are members of an affiliated group (as defined in section 1504), or (ii)the persons have a relationship described in subsection (b) of section 267; except that, for purposes of this clause, the phrase 80 percent or more shall be substituted for the phrase more than 50 percent each place it appears in such subsection and rules similar to the rules of subsections (c) and (e) (other than paragraphs (4) and (5) thereof) shall apply.

(c)

Conforming amendment

Section 45L(d) is amended by striking subsection (c) both places it appears and inserting subsection (b)(5) or (c). (d)

Effective Date

The amendments made by this section shall apply to property placed in service after December 31, 2015.

Elimination of basis reduction for low-income housing properties receiving certain energy benefits

(a)

New energy efficient home credit

Subsection (e) of section 45L of the Internal Revenue Code of 1986 is amended— (1)by striking adjustment.—For purposes and inserting “adjustment.—

(1)

In general

For purposes

; and

(2)by adding at the end the following new paragraph:

(2)

Exception for low-income housing properties

Paragraph (1) shall not apply to any property with respect to which a credit is allowed under section 42.

(b)

Energy efficient commercial buildings deduction

Subsection (e) of section 179D of the Internal Revenue Code of 1986 is amended— (1)by striking reduction.—For purposes and inserting “reduction.—

(1)

In general

For purposes

; and

(2)by adding at the end the following new paragraph:

(2)

Exception for low-income housing properties

Paragraph (1) shall not apply to any property with respect to which a credit is allowed under section 42.

(c)

Energy credit

Paragraph (3) of section 50(c) of the Internal Revenue Code of 1986 is amended— (1)by striking and at the end of subparagraph (A); (2)by striking the period at the end of subparagraph (B) and inserting , and; and (3)by adding at the end the following new subparagraph:

(C)paragraph (1) shall not apply to any property with respect to which a credit is allowed under section 42.

(d)

Effective date

The amendments made by this section shall apply to property placed in service after December 31, 2018.