April 8, 2014

Thomson Reuters Overview on Energy-Related Property Tax Incentives Now Available

NEW YORK — Thomson Reuters today announced the new ONESOURCE Property Tax overview on energy-related property tax incentives and exemptions is now available. Ideal for tax executives managing property tax compliance or looking to invest in energy-related property, the report provides a general overview of the energy-saving tax incentives available to businesses in various states, including California, Colorado, Texas, and Washington DC.

“Knowing about each state’s unique tax laws is just the first step of many to benefit from these tax breaks,” said Amy Walker, Senior Research Specialist at Thomson Reuters. “As each state has different nuances to their energy-related exemptions, businesses also need to understand key criteria, deadlines and relevant dates to ensure their energy-related purchases and projects do indeed qualify.”

Sample highlights from the overview report include:

  • In California, the State Board of Equalization (SBE) has issued a letter to county assessors regarding the statutory exclusion of construction of active solar energy systems from property tax assessment. This exclusion is incorporated in Cal. Rev. & Tax. Cd. § 73 which provides (1) that the term newly constructed does not include the construction or addition of any active solar energy system for property tax purposes, and (2) a sunset date of Jan. 1, 2017. Eligible construction completed on an active solar energy system before Jan. 1, 2017 will remain excluded from the definition of new construction under Cal. Rev. & Tax. Cd. § 73 until there is a subsequent change in ownership of the facility. Eligible new construction includes storage devices, power conditioning equipment, transfer equipment, and parts related to the functioning of those items. It includes only equipment used up to, but not including, the stage of conveyance or use of the electricity. All construction or addition of any active solar energy system on or after Jan. 1, 2017 will be considered assessable new construction. (California State Board of Equalization Letter to Assessors 2013/042, 09/23/2013.)
  • In Colorado, effective March 19, 2013, the following items are exempt from personal property tax: systems exclusively using solar energy; cogeneration systems that produce two forms of energy for industrial, commercial, heating or cooling purposes; cogeneration systems will be exempt beginning Oct.1, 2016.
  • As of Jan. 1, 2014, in Texas, energy storage systems, defined as systems that store energy to be used at a later time, are exempt from property tax. These systems must be used for the control of air pollution in a nonattainment area and can include chemical, mechanical or thermal devices. In addition, chief appraisers are now required to use the cost method of appraisal to determine the market value of commercial solar energy property constructed or installed on or after Jan. 1, 2014. There is a state-mandated 20 percent depreciation floor on the property.
  • In Washington DC, solar systems are exempted from personal property tax. Also, starting on Oct. 1, 2016, cogeneration systems are also exempted from personal property tax.

The special energy-related property tax overview report provides a high-level look at the type of information automatically incorporated in the ONESOURCE Property Tax software suite. Thomson Reuters in-house property tax research and content experts monitor changes in key property tax related dates for all 50 states and Puerto Rico. The report is available for download at no cost at https://tax.thomsonreuters.com/wp-content/pdf/property-tax/2014-Press-Release.pdf.

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