‘‘(10) WHEN EXPENDITURE MADE; AMOUNT OF 
EXPENDITURE.—
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), an expenditure with respect 
to an item shall be treated as made when the 
original installation of the item is completed. 
‘‘(B) EXPENDITURES PART OF BUILDING 
CONSTRUCTION.—In the case of an expenditure 
in connection with the construction of a struc-
ture, such expenditure shall be treated as made 
when the original use of the constructed struc-
ture by the taxpayer begins. 
‘‘(11) PROPERTY
FINANCED
BY
SUBSIDIZED 
ENERGY FINANCING.—
‘‘(A) REDUCTION OF EXPENDITURES.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in subparagraph (C), for purposes of 
determining the amount of expenditures 
made by any individual with respect to any 
dwelling unit, there shall not be taken into 
account expenditures which are made from 
subsidized energy financing. 
‘‘(ii) SUBSIDIZED
ENERGY
FINANC-
ING.—For purposes of clause (i), the term 
‘subsidized energy financing’ has the same
meaning given such term in section 
48(a)(4)(C). 
‘‘(B) DOLLAR LIMITS REDUCED.—The dol-
lar amounts in the table contained in subsection 
(b)(3) with respect to each property purchased 
for such dwelling unit for any taxable year of 
such taxpayer shall be reduced proportionately 
by an amount equal to the sum of—
‘‘(i) the amount of the expenditures 
made by the taxpayer during such taxable 
year with respect to such dwelling unit and 
not taken into account by reason of sub-
paragraph (A), and 
‘‘(ii) the amount of any Federal, 
State, or local grant received by the tax-
payer during such taxable year which is 
used to make residential energy property 
expenditures with respect to the dwelling 
unit and is not included in the gross in-
come of such taxpayer. 
‘‘(C) EXCEPTION FOR STATE PROGRAMS.—
Subparagraphs (A) and (B) shall not apply to 
expenditures made with respect to property for 
which the taxpayer has received a loan, State
tax credit, or grant under any State energy pro-
gram. 
‘‘(e) BASIS ADJUSTMENTS.—For purposes of this 
subtitle, if a credit is allowed under this section for any 
expenditure with respect to any property, the increase in 
the basis of such property which would (but for this sub-
section) result from such expenditure shall be reduced by 
the amount of the credit so allowed. 
‘‘(f) REGULATIONS.—The Secretary shall promulgate 
such regulations as necessary to take into account new 
technologies regarding energy efficiency and renewable en-
ergy for purposes of determining energy efficiency and 
savings under this section. 
‘‘(g) TERMINATION.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), this section shall not apply with respect 
to any taxable years beginning after December 31, 
2008. 
‘‘(2) TIER
ENERGY-EFFICIENT
BUILDING 
PROPERTY EXPENDITURES.—This section shall not 
apply to expenditures for tier 1 energy-efficient 
building property in taxable years beginning after 
December 31, 2005.’’. 
(b) CONFORMING AMENDMENTS.—
(1) Subsection (a) of section 1016 of the Inter-
nal Revenue Code of 1986 as amended by section 
1(b)(3), is amended by striking ‘‘and’’ at the end of 
paragraph (28), by striking the period at the end of 
paragraph (29) and inserting ‘‘, and’’, and by add-
ing at the end the following new paragraph: 
‘‘(30) to the extent provided in section 25C(e), 
in the case of amounts with respect to which a credit 
has been allowed under section 25C.’’. 
(2) The table of sections for subpart A of part 
IV of subchapter A of chapter 1 of such Code is 
amended by inserting after the item relating to sec-
tion 25B the following new item:
‘‘Sec. 25C. Nonbusiness energy property.’’.
(c) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to expenditures made after December 31, 
2002. 
(2) ENERGY EFFICIENT BUILDING PROPERTY 
USED IN A PRINCIPAL RESIDENCE.—In the case of 
energy efficient building property, as defined in sec-
tion 25B(c) of the Internal Revenue Code of 1986, 
as added by subsection (a), the amendments made
by this section shall apply to expenditures made 
after March 31, 2003.
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