The Accounting Impact of Building Green
The National Green Building Standard (NGBS) provides criteria for rating the environmental impact of design and construction practices to achieve conformance with specified performance levels for green buildings.
Key Elements of a green building include:
Energy efficiency and renewable energy
Water stewardship
Environmentally preferable building materials and specifications
Toxics reduction
Waste reduction
Smart growth and sustainable development
Individual Income tax credits for going green are available in 22 states. In addition, the U.S. Department of Energy and various utilities offer a variety of tax credits and rebates to support the growth of Green Buildings that improve energy efficiency, boost the use of renewable energy sources, and support efforts to conserve energy and reduce pollution.
In addition to state tax incentives for green construction, many cities waive permit fees or accelerate the approval process for the construction of sustainable buildings.
California is a leader in offering tax incentives to encourage green building projects. Today there are more than 3,500 LEED-certified green buildings in California representing over 500 million square feet of real estate. A few examples of the available tax credits or incentives in California include:
Gross income from certain grants awarded under the 2001 Energy Conservation Act to qualified small businesses and low-income residential property owners for constructing improvements or retrofitting buildings to be more energy efficient is excluded and not taxable. A qualified small business is an independently owned and operated business with fewer than 100 employees and average annual gross receipts of ten million dollars or less.
California manufacturers of green technology may qualify to purchase new equipment without the payment of sales or use tax.
Silicon Valley Power, Burbank Water and Power, as well as the cities of Los Angeles, Glendale, Riverside and San Diego offer incentives to residential and commercial customers for the installation of new grid-connected solar electric systems.
Solar power facilities may qualify as farm equipment and be eligible for a partial exemption of the sales tax on farming equipment and machinery that is primarily used in agricultural activity.
It is important to check your planned construction projects with your qualified accounting firm or CPA to determine the tax implications.
