Real Estate Provisions Included in the Newly Passed Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act

The recently signed HR4853, otherwise known as the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act, will extend Bush era tax brackets and a capital gains tax rate of 15 percent through 2011 and 2012.

It will also extend numerous energy efficiency credits through December 31, 2011 -- the Energy Efficient New Homes, Energy Efficient Existing Homes, and Energy Efficient Building credits. According to NAR the provisions included in HR4853 are as follows:

Energy-efficient New Homes Credit: A tax credit, based on numerous energy efficiency milestones, has been available to some home construction activities since about 2008. That provision had expired, but is now renewed through 2011. The credit is available to builders/manufacturers of new homes that meet the various milestones.

Energy-efficient Existing Homes: The tax credit for homeowners who make specified energy-related improvements to existing homes was scheduled to expire December 31, 2010. It has been extended through December 31, 2011. The qualified investments include replacement windows, doors, or skylights, some roofing materials and some heating and cooling equipment. The amounts of the credit vary depending on the asset and its energy rating as determined by the Energy Star program. The standards for qualified property are tougher than they were in 2010, so homeowners will need to exercise great care in their acquisitions. The credit is available only for improvements to a principal residence and only if the improvement is original to the property and only if the property will last for at least 5 years. The credit is not available if the improvement is financed using any form of subsidized energy program.

Energy-efficient Buildings: Owners of commercial buildings may qualify for tax credits for investments in designated insulation, windows and roofing improvements. Improvements to the heating/air conditioning systems, water heaters and air circulation fans may also be eligible for the credit. As with the home improvement credits, these credits require compliance with a variety of energy efficiency standards. Investors should exercise great care in determining what assets will satisfy the given criteria. The improvements must be in place on or before December 31, 2011.