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Nonbusiness energy property credit is retroactively extended and modified.

February 20, 2016

For qualified energy property placed in service before Jan. 1, 2015, a taxpayer could claim a credit up to a $500 lifetime limit (with no more than $200 from windows and skylights) over the aggregate of the credits allowed to the taxpayer for all earlier tax years ending after Dec. 31, 2005. The credit equalled the sum of: (1) 10% of the amount paid or incurred by the taxpayer for qualified energy efficiency improvements installed during the tax year, and (2) the amount of the residential energy property expenditures paid or incurred by the taxpayer during the tax year. The credit for residential energy property expenditures couldn't exceed: (i) $50 for an advanced main circulating fan; (ii) $150 for any qualified natural gas, propane, or hot water boiler; and (iii) $300 for any item of energy-efficient building property.

Qualified energy efficiency improvements were energy efficient building envelope components, such as (a) insulation materials or systems specifically and primarily designed to reduce heat loss/gain, that met criteria set by the International Energy Conservation Code (IECC); or (b) exterior windows, skylights or doors, or any metal roof with pigmented coating or asphalt roof with cooling granules specifically designed to reduce heat gain, installed on a dwelling unit that met certain Energy Star program requirements.

Under pre-Act law, the credit wasn't available for property placed in service after Dec. 31, 2014.

New law. The Act retroactively extends the nonbusiness energy property credit for two years, to apply to property placed in service after Dec. 31, 2014, and before Jan. 1, 2017. (Code Sec. 25C(g)(2), as amended by Act Sec. 181(a)) For property placed in service after Dec. 31, 2015, the Act provides that exterior windows, including skylights, and exterior doors must meet Version 6.0 of the Energy Star program requirements to qualify for the nonbusiness energy property credit. (Code Sec. 25C(c)(2)(B), as amended by Act Sec. 181(b)(2)

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