The bill creates a residential energy reduction income tax credit for the income tax years commencing on or after January 1, 2015, but prior to January 1, 2020, for any resident individual who makes qualified improvements to their home that result in improved energy efficiency, measured in millions of British thermal units (MMBTU). In order to claim the credit, a resident individual must seek a credit certificate from the Colorado energy office (office) and must also obtain a pre-improvement residential energy efficiency audit from a certified home energy rater. After the improvements are made, a post-improvement inspection must be conducted that establishes the net residential energy reduction as compared to the pre-improvement residential energy efficiency audit. For a qualified residence, the tax credit is equal to:
- $1,000 for a residential energy reduction of 30 or more but less than 45 MMBTU;
- $1,500 for a residential energy reduction of 45 or more but less than 60 MMBTU; or
- $2,000 for a residential energy reduction of 60 or more MMBTU.
The bill also specifies that the office has the authority to reduce the amount of the tax credit by an amount less than or equal to any available residential energy efficiency utility rebates or other such incentives available through the office, and requires the office to post guidelines on its web site to explain how this reduction will occur.
The bill also allows the office to reduce a tax credit, after an accounting of the cost of the qualified improvements, if the costs are not sufficient to justify a full tax credit, notwithstanding the MMBTU residential energy reduction for the qualified residence. The bill requires the office to post guidelines on its web site to explain how a tax credit could be reduced dependent on the cost of the qualified improvements.
The tax credit is nonrefundable, but it is allowed to be carried forward as an offset to future tax liability for a period of 5 years.