Property Tax Post: The Oscars, Climate Change, and Green Tax Incentives

Mad Max

The most recent entry in the Mad Max movie franchise cleaned up at Sunday’s Oscars. The award-winning film depicting a violent post-apocalyptic world of environmental devastation warranted as much commentary on current climate conditions as it did in entertainment. Leonardo DiCaprio even got in on the climate change action and made a heartfelt plea in his acceptance speech for world leaders to step up.

There is undoubtedly growing public interest in preserving and creating clean energy sources. States offer a variety of property tax assessment relief and exemptions to promote conservation, production, and use of renewable energy. States also encourage taxpayers to adopt energy-efficient practices and to switch to green power sources like wind and solar, geothermal, hydropower, or even plant matter. Activities like installing better insulation, upgrading thermostats, and replacing windows also lead to the use of less energy and tax savings. Implementing these green measures on a large scale will invariably contribute to sustaining our natural resources and hopefully save us from a Mad Max future.

If you haven’t seen the Mad Max movies, they go a little like this—fast forward to the collapse of civilization. Humans have sucked the earth dry of natural resources, which leads to water wars, desert fortresses, and armored trucks all wrapped up in deadly high-speed chases through a desert wasteland. Sprinkle in Tina Turner and Charlize Theron and bam—there’s the future. Although this Mad Max world is the product of an unchecked imagination, fantastically visionary or improbable, the ubiquitous influence of global warming is felt worldwide.

Assessment Relief and Exemptions

When contemplating the advantages of state energy tax relief programs, taxpayers should know that for the purpose of exemption, some states distinguish between energy-producing devices designed to adapt or convert energy (e.g. wind, solar, or geothermal) and items used for energy conservation, like reflective sheeting or double-plated windows. For example, Texas will not apply the property tax exemption to energy conservation or other devices that can be used regardless of the energy source used.

Texas provides guidance and a list of solar and wind-powered energy devices in its Solar and Wind-Powered Energy Device Exemption and Appraisal Guidelines. Some of these devices include solar greenhouses or atriums, solar water heaters, water  or drum walls, roof ponds with movable insulated covers, and rock bins to name a few.

In New York, energy conservation measures added to homes that qualify for financing under a home conservation plan or any conservation-related state or federal tax credit or deduction, are exempt from property tax to the extent of any increase in the property's assessed value resulting from the installation of the conservation measure. It’s the same in Los Angeles County, California, where the initial purchaser of a building with an active solar energy system may qualify for an exclusion from assessment on the portion of the value attributable to the active solar energy system. Active solar energy systems added to existing properties are automatically excluded from assessment.

Montgomery County, Maryland, offers a property tax credit against county property tax for energy conservation devices. Maryland’s local option tax incentive is unique because it is applied in the form of a credit, not an exemption or exclusion as in the case of most other property tax programs.

As Oscar winner Leonardo DiCaprio said in his speech receiving the academy award for The Revenant, “[c]limate change is real, and it’s happening right now.” He went on to say that “we collectively felt in 2015…the hottest year in record history.”  So let’s avoid a post-apocalyptic disaster, reduce our carbon footprints, conserve energy, continue to create alternative fuel and energy sources, and take advantage of state tax breaks. Everybody wins.

Continue the discussion on LinkedIn:  Do you know your carbon footprint?

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By Cynthia N. Wells