Mark Johnson Custom Homes Blog

Jacksonville, NC new home builder Mark Johnson Custom Homes has had experience building Green homes in North Carolina. Our Energy Star home in Wilmington, NC received the highest LEED for Homes certification from the U.S. Green Building Council earlier this year. But it seems the Energy Star Program, which is overseen by the Environmental Protection Agency, has received criticism lately for not keeping up with the latest in energy efficiency improvements. According to a Custom Home Online article by Stephani L. Miller, the EPA has promised to strengthen its program to maintain its benchmarking role. Below is an excerpt and to read the complete article, click here!

 “EPA will implement several enhancements to the Energy Star products program that ultimately will benefit consumers, including:

• Setting specifications that will ensure consistent application of the Energy Star logo to identify the top 25 percent most-efficient products within a category.
• Expanding product coverage to include new consumer product categories that have high energy-saving potential.
• Increasing verification of compliance with program requirements and improving efforts to identify and address product performance issues. All products will be required to submit product performance testing results to EPA from an accredited laboratory before a product can be qualified under Energy Star.
• Implementing measures that will ensure Energy Star performance specifications are tightened as necessary so that the program consistently represents top-performing products and doesn’t fall behind performance improvements in the marketplace.
• Developing an Energy Super Star program as a higher performance tier within the Energy Star program to help consumers more easily identify the top-performing products within a category. The Super Star tier will comprise approximately 5 percent of products within a category and will include advanced technologies and products that have a longer payback period than those qualified under the main Energy Star program.”

The House passed the unemployment extension bill that contains the homebuyer tax credit extension/expansion and NOL carryback this afternoon. The final tally was 403 to 12. There was a very strong bipartisan showing.

Once signed into law the bill will:

• Extend the $8,000 credit for first-time home buyers for sales contracts entered into by April 30, 2010 and closed by June 30.
• Expand to include a new $6,500 credit for owners of existing homes who are purchasing a new principal residence.
• Increase income eligibility limits to claim the full credit amount to $125,000 for single taxpayers and $225,000 for married taxpayers filing a joint return.

The bill now goes to the White House.  It is not known yet when the bill will be sent over to the President or when it will be signed, other than it is expected to occur quickly. Stay tuned for the latest update from the WCFHBA. In the meantime, more information is available here. 

Net Operating Losses and Small Home Building Companies

There is some confusion about who can use the NOL carryback. Some smaller volume members view this as a provision that only benefits “the big guys.” It is not just corporations who can use the carryback provision, but also our smaller builders who are pass-through entities. Below is information that describes how smaller builders can use NOLs just like corporations can. Ultimately, they may need to discuss their unique situations with a qualified tax professional.  

• Pass-thru entities (e.g. partnerships, LLCs, S corps, etc — basically everything but sole props and C Corps) do not claim NOLs, and thus do not have a need for a carryback.
• In fact, according to the IRS SOI data, 50 percent more loss deductions are claimed on individual tax forms (due to sole props and pass-through entities) than are claimed on corporate tax forms.
• Corporations are more likely to have losses because of their nature. But smaller builders who are C Corps or are pass-through entities will benefit.
• However, NOLs are like other deductions (and revenue for that matter) in that they are passed-through to the owners/partners. The carryback rules are applicable at the individual level.
• Small home builders will benefit from an expanded NOL carryback period.
• IRS Publication 536 explains the rule for using the present law carryback on individual tax forms, including loss deductions that are due to pass-through variables from partnerships and S Corps.
• There are certain other rules that complicate things at the individual level (most notably the passive loss rules), but there can still be a benefit.
• It is true that most small builders do not have “losses” like the big national builders. They will simply slow down and have profits go to zero.

Information Courtesy of the Wilmington-Cape Fear Home Builders Association