Connecticut Goes Green with the "Green Buildings Credit"November 02, 2009
On October 7, 2009, the Governor signed legislation that created a green buildings credit. The credit is applied to the Connecticut business tax and based on a percentage of allowable costs. The credit will be administered through the Office of Policy and Management and is available for income years beginning on or after January 1, 2012. However, there are some hoops to jump through to obtain the credit. Some important requirements to remember are as follows:
- For LEED gold construction or renovation the credit is 8% of allowable costs
- For LEED platinum construction or renovation the credit is 10.5% of allowable costs
- Allowable costs must not exceed $250 per square foot for new construction and $150 per square foot for renovation
- Taxpayers must file an application for initial credit voucher, eligibility certificate and application with the Office of Policy and Management
- Architects or engineers accredited through a LEED accredited professional program (or equivalent) can issue eligibility certificates
- There will be a fee of up to $10,000 due with the application
- To be eligible a building must use no more than 70% of the energy use permitted by the state building code for construction, 80% for renovation
- Use of the credit will be limited to 25% per year
- Unused credits may also be carried forward up to 5 years
- Credit may also be assigned or transferred (essentially sold like movie credits)
Certificate of occupancy must be obtained in 2010 or later
The credit is aimed at large businesses or corporate owners making an effort to go green. The credit applies to business taxes only, thus, individuals, LLCs, partnerships and S-corporations paying tax on the "pass-through" income are not eligible.
Assignment or transfer (sale) of the credit(s) is a nice feature that gives corporations with little or no tax liability incentive to make pro-environmental improvements. The credit(s) can be sold to other corporations looking to reduce their Connecticut business tax.
Additional incentives are also offered for meeting further requirements. For example, if the project is a mixed use, located in an enterprise zone or brownfield, does not require a sewer line extension more than one-eigth mile; or is located near public transit; an additional 0.5% credit will be allowed.
These are just a few of the highlights of the Green Building Credit. If you would like additional details or are planning to take advantage of the credit, contact BlumShapiro at 866.356.BLUM.