Building Efficiently Act of 2016

Summary: Building Efficiently Act of 2016  This bill amends the Internal Revenue Code to expand the new energy efficient home tax credit to allow, in lieu of the existing credit, a credit for 3.3% of the cost of constructing a new energy efficient home that is a qualified energy efficient residential rental property.  An energy efficient residential rental property must be certified as being constructed, reconstructed, or retrofitted under a plan designed to reduce energy and power consumption of the building by at least 40% compared to: (1) the baseline annual energy and power consumption of the building in the case of a retrofit made to an existing building, or (2) a reference building which meets the minimum requirements of the International Energy Conservation Code 2004 in any other case.  The bill also eliminates the basis reduction requirements for low-income housing properties receiving: (1) the new energy efficient home credit, (2) the energy efficient commercial buildings deduction, or (3) the credit for investments in energy property. 

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Building Efficiently Act of 2016''.

SEC. 2. 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 2016.
                    ``(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 2016, 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 2016.
                    ``(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.

SEC. 3. 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, 2015.