I

106TH CONGRESS

1ST SESSION H. R. 1358

To amend the Internal Revenue Code of 1986 to provide tax credits for

making energy efficiency improvements to existing homes and for constructing new energy efficient homes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 25, 1999

Mr. THOMAS (for himself, Mr. RANGEL, Mr. HERGER, Mr. RAMSTAD, Mr.

ENGLISH, and Mr. LIPINSKI) introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to provide

tax credits for making energy efficiency improvements

to existing homes and for constructing new energy efficient homes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Energy Efficient Af5 fordable Home Act of 1999’’.
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1 SEC. 2. CREDIT FOR ENERGY EFFICIENCY IMPROVEMENTS

2 TO EXISTING HOMES.

3 (a) IN GENERAL.—Subpart A of part IV of sub4 chapter A of chapter 1 of the Internal Revenue Code of

5 1986 (relating to nonrefundable personal credits) is

6 amended by inserting after section 25A the following new

7 section:

8 ‘‘SEC. 25B. ENERGY EFFICIENCY IMPROVEMENTS TO EXIST9 ING HOMES.

10 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in11 dividual, there shall be allowed as a credit against the tax

12 imposed by this chapter for the taxable year an amount

13 equal to 20 percent of the amount paid or incurred by

14 the taxpayer for qualified energy efficiency improvements

15 installed during such taxable year.

16 ‘‘(b) LIMITATIONS.—

17 ‘‘(1) MAXIMUM CREDIT.—The credit allowed by

18 this section with respect to a dwelling shall not ex19 ceed $2,000.

20 ‘‘(2) PRIOR CREDIT AMOUNTS FOR TAXPAYER

21 ON SAME DWELLING TAKEN INTO ACCOUNT.—If a

22 credit was allowed to the taxpayer under subsection

23 (a) with respect to a dwelling in 1 or more prior tax24 able years, the amount of the credit otherwise allow25 able for the taxable year with respect to that dwell26 ing shall not exceed the amount of $2,000 reduced
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1 by the sum of the credits allowed under subsection

2 (a) to the taxpayer with respect to the dwelling for

3 all prior taxable years.

4 ‘‘(c) CARRYFORWARD OF UNUSED CREDIT.—If the

5 credit allowable under subsection (a) exceeds the limita6 tion imposed by section 26(a) for such taxable year re7 duced by the sum of the credits allowable under subpart

8 A of part IV of subchapter A (other than this section),

9 such excess shall be carried to the succeeding taxable year

10 and added to the credit allowable under subsection (a) for

11 such taxable year.

12 ‘‘(d) QUALIFIED ENERGY EFFICIENCY IMPROVE13 MENTS.—For purposes of this section, the term ‘qualified

14 energy efficiency improvements’ means any energy effi15 cient building envelope component, and any energy effi16 cient heating, cooling, or water heating appliance, the in17 stallation of which, by itself or in combination with other

18 such components or appliances, is certified to improve the

19 annual energy performance of the existing home by at

20 least 30 percent, if—

21 ‘‘(1) such component or appliance is installed in

22 or on a dwelling—

23 ‘‘(A) located in the United States, and
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1 ‘‘(B) owned and used by the taxpayer as

2 the taxpayer’s principal residence (within the

3 meaning of section 121),

4 ‘‘(2) the original use of such component or ap5 pliance commences with the taxpayer, and

6 ‘‘(3) such component or appliance reasonably

7 can be expected to remain in use for at least 5

8 years.

9 Such certification shall be made by the contractor who in10 stalled such improvements, a local building regulatory au11 thority, or a qualified energy consultant (such as a utility

12 or an accredited home energy rating system provider).

13 ‘‘(e) SPECIAL RULES.—

14 ‘‘(1) TENANT-STOCKHOLDER IN COOPERATIVE

15 HOUSING CORPORATION.—In the case of an indi16 vidual who is a tenant-stockholder (as defined in sec17 tion 216) in a cooperative housing corporation (as

18 defined in such section), such individual shall be

19 treated as having paid his tenant-stockholder’s pro20 portionate share (as defined in section 216(b)(3)) of

21 the cost of qualified energy efficiency improvements

22 made by such corporation.

23 ‘‘(2) CONDOMINIUMS.—

24 ‘‘(A) IN GENERAL.—In the case of an indi25 vidual who is a member of a condominium man-
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1 agement association with respect to a condo2 minium which he owns, such individual shall be

3 treated as having paid his proportionate share

4 of the cost of qualified energy efficiency im5 provements made by such association.

6 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO7 CIATION.—For purposes of this paragraph, the

8 term ‘condominium management association’

9 means an organization which meets the require10 ments of paragraph (1) of section 528(c) (other

11 than subparagraph (E) thereof) with respect to

12 a condominium project substantially all of the

13 units of which are used as residences.

14 ‘‘(f) BASIS ADJUSTMENT.—For purposes of this sub15 title, if a credit is allowed under this section for any ex16 penditure with respect to any property, the increase in the

17 basis of such property which would (but for this sub18 section) result from such expenditure shall be reduced by

19 the amount of the credit so allowed.

20 ‘‘(g) TERMINATION.—Subsection (a) shall apply to

21 qualified energy efficiency improvements installed during

22 the period beginning on January 1, 1999, and ending on

23 December 31, 2003.’’.

24 (b) CONFORMING AMENDMENTS.—
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1 (1) Subsection (c) of section 23 of such Code

2 is amended by inserting ‘‘, section 25B, and section

3 1400C’’ after ‘‘other than this section’’.

4 (2) Subparagraph (C) of section 25(e)(1) of

5 such Code is amended by striking ‘‘section 23’’ and

6 inserting ‘‘sections 23, 25B, and 1400C’’.

7 (3) Subsection (d) of section 1400C of such

8 Code is amended by inserting ‘‘and section 25B’’

9 after ‘‘other than this section’’.

10 (4) Subsection (a) of section 1016 of such Code

11 is amended by striking ‘‘and’’ at the end of para12 graph (26), by striking the period at the end of

13 paragraph (27) and inserting ‘‘; and’’, and by add14 ing at the end the following new paragraph:

15 ‘‘(28) to the extent provided in section 25B(f),

16 in the case of amounts with respect to which a credit

17 has been allowed under section 25B.’’.

18 (5) The table of sections for subpart A of part

19 IV of subchapter A of chapter 1 of such Code is

20 amended by inserting after the item relating to sec21 tion 25A the following new item:

‘‘Sec. 25B. Energy efficiency improvements to existing homes.’’.

22 (c) EFFECTIVE DATE.—The amendments made by

23 this section shall apply to taxable years ending after

24 December 31, 1998.
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1 SEC. 3. BUSINESS CREDIT FOR CONSTRUCTION OF NEW EN2 ERGY EFFICIENT HOME.

3 (a) IN GENERAL.—Subpart D of part IV of sub4 chapter A of chapter 1 of the Internal Revenue Code of

5 1986 (relating to business related credits) is amended by

6 inserting after section 45C the following new section:

7 ‘‘SEC. 45D. NEW ENERGY EFFICIENT HOME CREDIT.

8 ‘‘(a) IN GENERAL.—For purposes of section 38, in

9 the case of an eligible contractor, the credit determined

10 under this section for the taxable year is an amount equal

11 to the aggregate adjusted bases of all energy efficient

12 property installed in a qualified new energy efficient home

13 during construction of such home.

14 ‘‘(b) LIMITATIONS.—

15 ‘‘(1) MAXIMUM CREDIT.—

16 ‘‘(A) IN GENERAL.—The credit allowed by

17 this section with respect to a dwelling shall not

18 exceed $2,000.

19 ‘‘(B) PRIOR CREDIT AMOUNTS ON SAME

20 DWELLING TAKEN INTO ACCOUNT.—If a credit

21 was allowed under subsection (a) with respect

22 to a dwelling in 1 or more prior taxable years,

23 the amount of the credit otherwise allowable for

24 the taxable year with respect to that dwelling

25 shall not exceed the amount of $2,000 reduced

26 by the sum of the credits allowed under sub-
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1 section (a) with respect to the dwelling for all

2 prior taxable years.

3 ‘‘(2) COORDINATION WITH REHABILITATION

4 AND ENERGY CREDITS.—For purposes of this

5 section—

6 ‘‘(A) the basis of any property referred to

7 in subsection (a) shall be reduced by that por8 tion of the basis of any property which is attrib9 utable to qualified rehabilitation expenditures

10 (as defined in section 47(c)(2)) or to the energy

11 percentage of energy property (as determined

12 under section 48(a)), and

13 ‘‘(B) expenditures taken into account

14 under either section 47 or 48(a) shall not be

15 taken into account under this section.

16 ‘‘(c) DEFINITIONS.—For purposes of this section—

17 ‘‘(1) ELIGIBLE CONTRACTOR.—The term ‘eligi18 ble contractor’ means the person who constructed

19 the new energy efficient home.

20 ‘‘(2) ENERGY EFFICIENT PROPERTY.—The

21 term ‘energy efficient property’ means any energy

22 efficient building envelope component, and any en23 ergy efficient heating, cooling, or water heating ap24 pliance.
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1 ‘‘(3) QUALIFIED NEW ENERGY EFFICIENT

2 HOME.—The term ‘qualified new energy efficient

3 home’ means a dwelling—

4 ‘‘(A) located in the United States,

5 ‘‘(B) the construction of which is substan6 tially completed after December 31, 1998,

7 ‘‘(C) the original use of which is as a prin8 cipal residence (within the meaning of section

9 121) which commences with the person who ac10 quires such dwelling from the eligible con11 tractor, and

12 ‘‘(D) the energy efficiency of which is cer13 tified to exceed by 30 percent or more the ap14 plicable standards for energy efficiency, based

15 upon energy use or building component per16 formance established for comparable dwellings

17 under the 1998 International Energy Conserva18 tion Code.

19 ‘‘(4) CONSTRUCTION.—The term ‘construc20 tion’ includes reconstruction and rehabilitation.

21 ‘‘(5) ACQUIRE.—The term ‘acquire’ in22 cludes purchase and, in the case of reconstruc23 tion and rehabilitation, such term includes a

24 binding written contract for such reconstruction

25 or rehabilitation.
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1 ‘‘(d) CERTIFICATION.—A certification described in

2 subsection (c)(3)(D) with respect to a dwelling shall be

3 made by the eligible contractor, a local building regulatory

4 authority, or a qualified energy consultant (such as a util5 ity or an accredited home energy rating system provider).

6 ‘‘(e) BASIS ADJUSTMENT.—For purposes of this sub7 title, if a credit is allowed under this section for any ex8 penditure with respect to any property, the increase in the

9 basis of such property which would (but for this sub10 section) result from such expenditure shall be reduced by

11 the amount of the credit so allowed.

12 ‘‘(f) TERMINATION.—Subsection (a) shall apply to

13 dwellings purchased during the period beginning on Janu14 ary 1, 1999, and ending on December 31, 2003.’’.

15 (b) CREDIT MADE PART OF GENERAL BUSINESS

16 CREDIT.—Subsection (b) of section 38 of such Code (re17 lating to current year business credit) is amended by strik18 ing ‘‘plus’’ at the end of paragraph (11), by striking the

19 period at the end of paragraph (12) and inserting ‘‘, plus’’,

20 and by adding at the end thereof the following new para21 graph:

22 ‘‘(13) the new energy efficient home credit de23 termined under section 45D.’’.

24 (c) DENIAL OF DOUBLE BENEFIT.—Section 280C of

25 such Code (relating to certain expenses for which credits
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1 are allowable) is amended by adding at the end thereof

2 the following new subsection:

3 ‘‘(d) NEW ENERGY EFFICIENT HOME EXPENSES.—

4 No deduction shall be allowed for that portion of expenses

5 for a new energy efficient home otherwise allowable as a

6 deduction for the taxable year which is equal to the

7 amount of the credit determined for such taxable year

8 under section 45D.’’.

9 (d) CREDIT ALLOWED AGAINST REGULAR AND MIN10 IMUM TAX.—

11 (1) IN GENERAL.—Subsection (c) of section 38

12 of such Code (relating to limitation based on amount

13 of tax) is amended by redesignating paragraph (3)

14 as paragraph (4) and by inserting after paragraph

15 (2) the following new paragraph:

16 ‘‘(3) SPECIAL RULES FOR NEW ENERGY EFFI17 CIENT HOME CREDIT.—

18 ‘‘(A) IN GENERAL.—In the case of the new

19 energy efficient home credit—

20 ‘‘(i) this section and section 39 shall

21 be applied separately with respect to the

22 credit, and

23 ‘‘(ii) in applying paragraph (1) to the

24 credit—
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1 ‘‘(I) subparagraph (A) thereof

2 shall not apply, and

3 ‘‘(II) the limitation under para4 graph (1) (as modified by subclause

5 (I)) shall be reduced by the credit al6 lowed under subsection (a) for the

7 taxable year (other than the new en8 ergy efficient home credit).

9 ‘‘(B) NEW ENERGY EFFICIENT HOME

10 CREDIT.—For purposes of this subsection, the

11 term ‘new energy efficient home credit’ means

12 the credit allowable under subsection (a) by rea13 son of section 45D.’’.

14 (2) CONFORMING AMENDMENT.—Subclause (II)

15 of section 38(c)(2)(A)(ii) of such Code is amended

16 by inserting ‘‘or the new energy efficient home cred17 it’’ after ‘‘employment credit’’.

18 (e) LIMITATION ON CARRYBACK.—Subsection (d) of

19 section 39 of such Code is amended by adding at the end

20 the following new paragraph:

21 ‘‘(9) NO CARRYBACK OF NEW ENERGY EFFI22 CIENT HOME CREDIT BEFORE EFFECTIVE DATE.—

23 No portion of the unused business credit for any

24 taxable year which is attributable to the credit deter25 mined under section 45D may be carried back to
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1 any taxable year ending before the date of the enact2 ment of section 45D.’’.

3 (f) DEDUCTION FOR CERTAIN UNUSED BUSINESS

4 CREDITS.—Subsection (c) of section 196 of such Code is

5 amended by striking ‘‘and’’ at the end of paragraph (7),

6 by striking the period at the end of paragraph (8) and

7 inserting ‘‘, and’’, and by adding after paragraph (8) the

8 following new paragraph:

9 ‘‘(9) the new energy efficient home credit deter10 mined under section 45D.’’.

11 (g) CLERICAL AMENDMENT.—The table of sections

12 for subpart D of part IV of subchapter A of chapter 1

13 of such Code is amended by inserting after the item relat14 ing to section 45C the following new item:

‘‘Sec. 45D. New energy efficient home credit.’’.

15 (h) EFFECTIVE DATE.—The amendments made by

16 this section shall apply to taxable years ending after

17 December 31, 1998.

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