Sec. 207. Performance-based tax credits for commercial and residential buildings
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Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986, as amended by this Act, is amended by adding at the end the following new section: For purposes of section 38, in the case of an eligible taxpayer who places an eligible building in service, the deep retrofits and zero-energy commercial and residential buildings credit determined under this section for a taxable year is the applicable amount with respect to such eligible building. For purposes of subsection (a), the term eligible taxpayer means, with respect to an eligible building— for a residential building, the builder, and for a commercial building, the building owner.
An eligible taxpayer who is a building owner eligible for a credit under subparagraph
(B)of paragraph
(1)may elect to transfer such credit to the architect, builder, or contractor of such building. For purposes of this subsection, the term eligible building means a building— located in the United States, which is at least 50 percent occupied in the taxable year in the tax credit is claimed, with respect to which a certification has been issued for a qualifying reason pursuant to subsection (c), and with respect to which no credit under this section has been claimed for the same qualifying reason in a prior taxable year. For purposes of this paragraph, with respect to an eligible building, the term qualifying reason means such building— has undergone a deep energy retrofit, is a zero-energy-ready building, or is a zero-energy building placed in service at least 12 months prior to the taxable year in which the credit is claimed. A taxpayer may claim the credit under this section twice for the same building if— the credit is claimed in a taxable year for the qualifying reason described in subparagraph (B)(ii), and the credit is claimed in a succeeding taxable year for the qualifying reason described in subparagraph (B)(iii). In the case of a building with respect to which a deep energy retrofit was implemented, such retrofit shall meet the certification standard of subsection (b)(3)(A) if it has been completed and certified as a deep energy retrofit by a registered architect or engineer, or by another professional authorized by the Secretary of Energy by rule. In the case of a building which is a zero-energy building, such building shall meet the certification standard of subsection (b)(3)(A) if the building has been zero-energy over a span of 12 continuous months with at least 50 percent occupancy as verified— through certification by the Living Buildings Institute Zero Energy Certification Program, through certification by the LEED Zero Energy Certification Program Verification, or by another professional authorized by the Secretary of Energy by rule. In the case of a building which is a zero-energy-ready building, such building shall meet the certification standard of subsection (b)(3)(A)— in the case of a commercial building or high-rise residential building, if the taxpayer receives a certification from registered engineer, architect or other professional recognized by Secretary of Energy stating that such building meets the definition of a zero-energy-ready building under subsection (e)(16)(A), and if such building is a low-rise residential building— if such building has been certified as described in subsection (e)(16)(B)(i), if the taxpayer receives a certification from registered engineer, architect or other professional recognized by Secretary of Energy stating that such building meets the definition of a zero-energy-ready building under subsection (e)(16)(B)(ii). For purposes of subsection (a), the applicable amount shall be determined as follows: For certified zero-energy-ready buildings— for a residential building with no more than four dwelling units, $5,000 per dwelling unit, for a residential building with five or more dwelling units, $3,500 per dwelling unit, and for a commercial building, $3 per square foot of floor area. For certified zero-energy buildings— for a residential building with no more than four dwelling units, $5,000 per dwelling unit, for a residential building with five or more dwelling units, $3,500 per dwelling unit, and for a commercial building that is a zero-energy building for a period of 12 continuous months starting after the building is at least 50 percent occupied, $3 per square foot of floor area, provided that a zero-energy building may also receive the zero-energy-ready building incentive if it meets the criteria for this incentive. The following tax credit amounts shall be awarded to buildings upon completion of a deep energy retrofit— for a residential building, $10,000 per dwelling unit, up to a maximum of $1,000,000 per building, and for a commercial building, $25 per square foot of floor area, up to a maximum of $2,000,000 per building. In this section: The term Btu means British Thermal Unit. The term building energy means energy consumed at the building site as measured at the site boundary, which includes heating, cooling, ventilation, domestic hot water, indoor and outdoor lighting, plug loads, process energy, elevators and conveying systems, and intrabuilding transportation systems. The term deep energy retrofit means a project that uses energy efficiency measures and renewable energy resources to reduce the energy use of an existing building by at least 50 percent on an annual basis relative to the most recent 12 month period in which the building was fully occupied prior to the project, provided that energy efficiency measures must account for at least 80 percent of the reduction in energy use. The term delivered energy means any type of energy that could be bought or sold as building energy, including electricity, steam, hot or chilled water, natural gas, biogas, landfill gas, coal, coke, propane, petroleum and its derivatives, residual fuel oil, alcohol-based fuels, wood, biomass, and any other material consumed as fuel. The term exported energy means on-site renewable energy supplied through the site boundary and used outside the site boundary. The term high-rise commercial building means a commercial building of four or more above grade stories. The term high-rise residential building means a multi-family building with four or more above grade stories. h k W The term kWh means Kilowatt Hour. The term low-rise residential building means a single-family home or multifamily building with no more than three above grade stories. The term on-site renewable energy means any renewable energy collected and generated within the site boundary that is used for building energy, and the excess renewable energy exported outside the site boundary, provided that any renewable energy certificates associated with the on-site renewable energy must be retained or retired by the building owner or lessee to be claimed as on-site renewable energy. The term renewable energy means energy generated by biomass, hydro, geothermal, solar, wind, ocean thermal, wave action, or tidal action resources. The term renewable energy certificate means a certificate or credit that represents and conveys the environmental, social, or other nonpower qualities of one megawatt hour of renewable energy, and can be sold separately from the underlying physical electricity associated with the renewable energy resource. The term site boundary means the limits of the building site across which delivered energy and exported energy are measured. The term source energy means building energy plus the energy losses in thermal combustion in electricity generation resources; and energy losses in transmission and distribution to the building site. The term zero-energy building means a building for which, on a source energy basis, the actual annual delivered energy is less than or equal to the on-site renewable exported energy, provided that energy purchased from off-site and renewable energy generated on-site and then sold off-site shall be valued at 6000 Btu/kWh. The term zero-energy-ready building means a building that— if it is a commercial building or high-rise residential building— is in compliance with Standard 90.1–2019 published by the American Society of Heating, Refrigerating, and Air Conditioning Engineers, is in compliance with Appendix CA (Solar-Ready Zone) of the 2021 International Energy Conservation Code, and demonstrates that its energy consumption is at least 30 percent below the maximum permitted under American Society of Heating, Refrigerating, and Air Conditioning Engineers Standard 90.1–2019, as calculated using the methodology in Appendix G of such standard, and if it is a low-rise residential building— has an Energy Rating Index of 40 or less as calculated using the procedures in Chapter 3 of the residential section of the 2012 International Energy Conservation Code but excluding any renewable energy resources in the calculation, provided that certification of compliance with the Energy Rating Index requirement shall be made by a registered architect or engineer by another professional authorized by the Secretary of Energy by rule, is in compliance with Appendix RA (Solar-Ready Zone) of the 2021 International Energy Conservation Code, and is certified under— the Zero Energy Ready Homes program administered by the Department of Energy, or the Passive House specifications of the Passive Institute US or the International Passive House Institute. No credit shall be allowed under this section for any expense for which a deduction or credit is allowed under any other provision of this chapter, including under sections 25C, 25D, and 179D. The tax credit under this section shall terminate— for zero-energy and zero-energy-ready residential buildings, one year after the Secretary of Energy determines by rule that such buildings accounted for at least 20 percent of new residential buildings in the most recent calendar year, for zero-energy and zero-energy-ready commercial buildings, one year after the Secretary of Energy determines by rule that such buildings accounted for at least 20 percent of new commercial building construction in the most recent calendar year, for deep energy retrofits to residential buildings, one year after the Secretary of Energy determines by rule that at least 10 percent of units at residential buildings have undergone such retrofits, and for deep energy retrofits to commercial buildings, one year after the Secretary of Energy determines by rule that at least 10 percent of the floor area of commercial buildings has undergone such retrofits. Not later than one year after the date of the enactment of this section, the Secretary, after consultation with the Secretary of Energy, shall promulgate such regulations and guidance as are necessary to implement this section. Not later than two years after enactment of this section, and each calendar year thereafter, the Secretary shall report to Congress on the use of tax credits under this section, broken out by the applicable amount categories in subsection (d), which shall include— the dollar value of tax credits awarded to date and in the prior calendar year, and the number of units at residential buildings and the number of square feet of floor area in commercial buildings for which tax credits were awarded to date and in the prior year calendar year. . Section 38(b) of the Internal Revenue Code of 1986 is amended— in paragraph (33), by striking plus at the end, in paragraph (34), by striking the period at the end and inserting, plus , and by adding at the end the following new paragraph: the Deep energy retrofits and zero-energy commercial and residential buildings credit determined under section 45V(a). . The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item: Sec. 45V. Deep retrofits and zero-energy commercial and residential buildings. . The amendments made by this section shall apply to property placed in service after December 31, 2021.