‘‘(2) PRIOR CREDIT AMOUNTS FOR TAXPAYER
ON SAME DWELLING TAKEN INTO ACCOUNT.—If a
credit was allowed to the taxpayer under subsection
(a) with respect to a dwelling in 1 or more prior tax-
able years, the amount of the credit otherwise allow-
able for the taxable year with respect to that dwell-
ing shall not exceed the amount of $2,000 reduced
by the sum of the credits allowed under subsection
(a) to the taxpayer with respect to the dwelling for
all prior taxable years.
‘‘(c) CARRYFORWARD OF UNUSED CREDIT.—If the
credit allowable under subsection (a) exceeds the limita-
tion imposed by section 26(a) for such taxable year re-
duced by the sum of the credits allowable under subpart
A of part IV of subchapter A (other than this section),
such excess shall be carried to the succeeding taxable year
and added to the credit allowable under subsection (a) for
such taxable year.
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) NEW
ENERGY
EFFICIENT
DWELLING.—
The term ‘new energy efficient dwelling’ means a
dwelling—
‘‘(A) located in the United States,
‘‘(B) owned and used by the taxpayer as
the taxpayer’s principal residence (within the
meaning of section 121),
‘‘(C) the construction of which is substan-
tially completed after December 31, 1998,
‘‘(D) the original use of which commences
with the taxpayer, and
‘‘(E) which is certified to exceed by 30 per-
cent or more the applicable standards for en-
ergy efficiency based upon energy use or build-
ing component performance established for
comparable dwellings under the applicable
Model Energy Code (promulgated by the Coun-
cil of American Building Officials) or to exceed
such alternative standards for energy efficiency
as the Secretary may prescribe in consultation
with the Secretary of Energy.
‘‘(2) PURCHASE
PRICE.—The term ‘purchase
price’ means the adjusted basis of the dwelling on
the date of its acquisition by the taxpayer.
‘‘(3) QUALIFIED
ENERGY
EFFICIENCY
IM-
PROVEMENTS.—The term ‘qualified energy efficiency
improvements’ means any energy efficient building
envelope component, and any high energy efficiency
heating or cooling appliance, if—
‘‘(A) such component or appliance is in-
stalled in or on a dwelling—
‘‘(i) located in the United States, and
‘‘(ii) owned and used by the taxpayer
as the taxpayer’s principal residence (with-
in the meaning of section 121),
‘‘(B) the original use of such component or
appliance commences with the taxpayer, and
‘‘(C) such component or appliance reason-
ably can be expected to remain in use for at
least 5 years.
‘‘(4) ENERGY EFFICIENT BUILDING ENVELOPE
COMPONENT.—The term ‘energy efficient building
envelope component’ means—
‘‘(A) insulation material which is specifi-
cally and primarily designed to reduce, when in-
stalled in or on a dwelling, the heat loss or gain
of such dwelling,
‘‘(B) exterior windows that are certified to
equal or exceed the applicable standards for en-
ergy efficiency (as determined by the National
Fenestration Rating Council or similar body),
and
‘‘(C) such other components of the build-
ing envelope as the Secretary may prescribe in
consultation with the Secretary of Energy.
‘‘(5) HIGH ENERGY EFFICIENCY HEATING OR
COOLING APPLIANCE.—The term ‘high energy effi-
ciency heating or cooling appliance’ means mechani-
cal heating or cooling equipment (including a hot
water heater) which is certified by the manufacturer
as having an energy efficiency rating that equals or
exceeds 150 percent of the applicable minimum en-
ergy efficiency standard established under the Na-
tional Appliance Energy Conservation Act of 1987
(Public Law 100–12).
‘‘(e) CERTIFICATION.—
‘‘(1) NEW DWELLING CERTIFICATIONS.—A cer-
tification described in subsection (d)(1)(E) with re-
spect to a dwelling shall be made by the person who
constructed the dwelling or by a local building regu-
latory authority.
‘‘(2) WINDOWS.—A certification described in
subsection (d)(4)(B) with respect to a window shall
be made by the person who sold or installed the win-
dow.
‘‘(3) FORM OF CERTIFICATIONS.—Certifications
referred to in this subsection shall be in such form
as the Secretary shall prescribe, and, except in the
case of a certification by a representative of a local
building regulatory authority, shall include the tax-
payer identification number of the person making
the certification.
‘‘(f) SPECIAL RULES.—
‘‘(1) TENANT-STOCKHOLDER IN COOPERATIVE
HOUSING CORPORATION.—In the case of an individ-
ual who is a tenant-stockholder (as defined in sec-
tion 216) in a cooperative housing corporation (as
defined in such section), such individual shall be
treated as having paid his tenant-stockholder’s pro-
portionate share (as defined in section 216(b)(3)) of
the cost of qualified energy efficiency improvements
made by such corporation.
‘‘(2) CONDOMINIUMS.—
‘‘(A) IN GENERAL.—In the case of an indi-
vidual who is a member of a condominium man-
agement association with respect to a con-
dominium which he owns, such individual shall
be treated as having paid his proportionate
share of the cost of qualified energy efficiency
improvements made by such association.
‘‘(B) CONDOMINIUM
MANAGEMENT
ASSO-
CIATION.—For purposes of this paragraph, the
term ‘condominium management association’
means an organization which meets the require-
ments of paragraph (1) of section 528(c) (other
than subparagraph (E) thereof) with respect to
a condominium project substantially all of the
units of which are used as residences.
‘‘(g) BASIS ADJUSTMENT.—For purposes of this sub-
title, if a credit is allowed under this section for any ex-
penditure 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.
‘‘(h) EFFECTIVE DATE.—Subsection (a)(1) shall
apply to dwellings purchased during the period beginning
on January 1, 1999, and ending on December 31, 2003,
and subsection (a)(2) shall apply to qualified energy effi-
ciency improvements installed during such period.’’.
(b) CONFORMING AMENDMENTS.—
(1) Subsection (c) of section 23 of such Code
is amended by inserting ‘‘, section 25B, and section
1400C’’ after ‘‘other than this section’’.
(2) Subparagraph (C) of section 25(e)(1) of
such Code is amended by striking ‘‘section 23’’ and
inserting ‘‘sections 23, 25B, and 1400C’’.
(3) Subsection (d) of section 1400C of such
Code is amended by inserting ‘‘and section 25B’’
after ‘‘other than this section’’.
(4) Subsection (a) of section 1016 of such Code
is amended by striking ‘‘and’’ at the end of para-
graph (26), by striking the period at the end of
paragraph (27) and inserting ‘‘; and’’, and by add-
ing at the end the following new paragraph:
‘‘(28) to the extent provided in section 25B(g),
in the case of amounts with respect to which a credit
has been allowed under section 25B.’’.
(5) 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 25A the following new item:
‘‘Sec. 25B. Purchase of new energy efficient home and of energy
efficiency improvements to existing homes.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after
December 31, 1998.
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