House File 2447 - Introduced HOUSE FILE 2447 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HF 635) (SUCCESSOR TO HF 335) A BILL FOR An Act providing specified tax credits for the construction 1 and installation of geothermal heat pumps, and including 2 effective date and retroactive and other applicability 3 provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 2648HZ (2) 84 rn/sc

H.F. 2447 Section 1. NEW SECTION . 422.11I Geothermal heat pump tax 1 credit. 2 The taxes imposed under this division, less the credits 3 allowed under section 422.12, shall be reduced by a geothermal 4 heat pump tax credit equal to twenty percent of the federal 5 residential energy efficient property tax credit allowed for 6 geothermal heat pumps provided in section 25(D)(a)(5) of the 7 Internal Revenue Code for residential property located in Iowa. 8 Any credit in excess of the tax liability is not refundable 9 but the excess for the tax year may be credited to the tax 10 liability for the following ten years or until depleted, 11 whichever is earlier. The director of revenue shall adopt 12 rules to implement this section. 13 Sec. 2. Section 427.1, Code Supplement 2011, is amended by 14 adding the following new subsection: 15 NEW SUBSECTION . 38. Geothermal heating and cooling system. 16 a. The value added by any new or refitted construction or 17 installation of a geothermal heating or cooling system on or 18 after July 1, 2012, on property classified as residential. 19 The exemption shall be allowed for ten consecutive years. 20 The exemption shall apply to any value added by the addition 21 of mechanical, electrical, plumbing, ductwork, or other 22 equipment, labor, and expenses included in or required for the 23 construction or installation of the geothermal system, as well 24 as the proportionate value of any well field associated with 25 the system and attributable to the owner. 26 b. A person claiming an exemption under this subsection 27 shall obtain the appropriate forms from the assessor. The 28 forms shall be prescribed by the director of revenue. The 29 claim shall be filed no later than February 1 of the first 30 assessment year the exemption is requested and shall contain 31 information pertaining to all costs and other information 32 associated with construction and installation of the system. 33 Once the exemption is allowed, the exemption shall continue to 34 be allowed for ten consecutive years without further filing as 35 -1- LSB 2648HZ (2) 84 rn/sc 1/ 3

H.F. 2447 long as the property continues to be classified as residential 1 property. 2 c. The director shall adopt rules to implement this 3 subsection. 4 Sec. 3. IMPLEMENTATION. Section 25B.7 does not apply to the 5 property tax exemption enacted in this Act. 6 Sec. 4. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 7 immediate importance, takes effect upon enactment. 8 Sec. 5. RETROACTIVE APPLICABILITY. The following provision 9 or provisions of this Act apply retroactively to January 1, 10 2012, for tax years beginning on or after that date: 11 1. The section of this Act enacting section 422.11I. 12 Sec. 6. APPLICABILITY. The following provision or 13 provisions of this Act apply to assessment years beginning on 14 or after January 1, 2013: 15 1. The section of this Act enacting section 427.1, 16 subsection 38. 17 EXPLANATION 18 This bill provides an income tax credit and property tax 19 exemption for the construction or installation of a geothermal 20 heating or cooling system in connection with residential 21 property located in Iowa. 22 The bill provides for an income tax credit for such 23 installations equal to twenty percent of the federal 24 residential energy efficiency property income tax credit 25 allowed for geothermal heat pumps. The bill states that any 26 credit in excess of tax liability is not refundable but may be 27 credited to the tax liability for the following 10 years or 28 until depleted, whichever is earlier. 29 The bill additionally provides for a property tax exemption 30 equal to the value added by any new or refitted construction 31 or installation of a geothermal heating or cooling system on 32 or after July 1, 2012. The bill states that the exemption 33 shall be allowed for 10 consecutive years, and shall apply to 34 any value added by the addition of mechanical, electrical, 35 -2- LSB 2648HZ (2) 84 rn/sc 2/ 3

H.F. 2447 plumbing, ductwork, or other equipment, labor, and expenses 1 included in or required for the construction or installation 2 of the system, as well as the proportionate value of any well 3 field associated with the system and attributable to the owner. 4 The bill specifies procedures regarding claiming the exemption. 5 The bill provides for the adoption of rules by the director 6 of the department of revenue, and states that Code section 7 25B.7, regarding full state funding of property tax credits or 8 exemptions, shall not be applicable to the geothermal heating 9 and cooling system property tax exemption. 10 The bill takes effect upon enactment. Provisions in the 11 bill enacting the income tax credit for geothermal heat pumps 12 apply retroactively to January 1, 2012, for tax years beginning 13 on or after that date. Provisions enacting the property tax 14 exemption for geothermal heating and cooling systems apply to 15 assessment years beginning on or after January 1, 2013. 16 -3- LSB 2648HZ (2) 84 rn/sc 3/ 3