For folks considering a renewable energy project and believe there is some possibility for commencing it before the end of the year, the following information will be of interest. This information is intended solely as a primer. More detailed information and consultation with the appropriate professionals should be secured before taking any action. Please contact us for more information.
Projects Completed after the Sunset of the US Treasury’s 1603 Grant on December 31st, 2011
First, the bad news: The 1603 grant, which provides a grant in lieu of a tax rebate for 30% of the installed cost of a renewable energy system, ends December 31st, 2011. From all that we can glean, this grant option, which was extended for one year last December buried deep in the “Bush Tax Cut” extension, will not be given another such reprieve. And now for the good news: There is a “safe harbor” rule within the grant extending eligibility to those entities with renewable projects in flight when more than 5% of the total cost of the property has been paid or incurred or significant work towards project completion has been accomplished.
The significance of the grant is that it makes it much easier for community-owned renewable energy projects to realize the benefit of incentives. Without it, those wishing to invest in a renewable energy project and enjoy the full benefit of incentives must have a high marginal tax bracket and passive income against which the credits would apply. Time is of the essence if you are interested in pursuing this grant (in lieu of the tax rebate), but you expect that your project could not be physically completed until after the grant’s sunset on December 31st of 2011. If your project finance will be coming from higher tax bracket passive income individuals, this is of little consequence.