Senate bill would offer tax credit to residential landlords making energy upgrades

State Senator Eric Kearney (D-Avondale) introduced a bill which would create a tax credit for landlords who improve the energy efficiency of their buildings. Senator Kearney hopes that the bill he introduced last month will encourage residential landlords to update their units and lessen the utility costs on their tenants.

“I received complaints from constituents who live in apartments that lack general upkeep and every month they pay for the lack of maintenance” Senator Kearney stated. “My constituents in rental units deserve to live in safe, eco-friendly environments that decrease their utility bills, and Senate Bill 310 provides landlords with positive incentive to make changes.”

If implemented, the bill would give residential landlords a 15 percent income tax credit for making upgrades by installing energy-saving devices, replacing aging appliances with Energy Star-rated appliances, sealing and insulating air ducts, and upgrading exterior wall windows and doors.

Improved sealing and insulation of duct work has been reported as saving as much as 20 percent in energy costs alone.  Senator Kearney says that the idea of making these efficiency upgrades is one that benefits everybody, and one that is particularly relevant in today’s economy.

“Energy costs are rising and given the unfortunate state of our economy few people can afford increased utility bills, especially if they are related to a lack of maintenance.”

The proposed legislation does more than simply promote energy upgrades, it also incentivizes upgrades to historic structures which most often house renters in multi-unit dwellings within the city’s inner neighborhoods.  The news comes on the heels of complimentary legislation introduced by Senator Kearney in September that proposed a 25 percent tax credit for the renovation of homes built before 1950 in low income neighborhoods.

“Both the property and the greater community benefit from home renovations. When homeowners invest in their properties the monetary value of the neighborhood increases along with its reputation.”

  • Dustin Clark

    This is a grand idea!! Does anyone know if there is a cap on the tax credit amount? I think spray-foam insulation could be a market to really benefit, so long as the tax break is significant enough. So many landlords only upgrade aesthetics, and many new tenants do not realize how cold a place will in winter as they tour in the spring and summer months. Some landlords on multi-unit blocks find it easier to not maintain and or make efficiency efforts, rather provide free heat that is constantly cranked high to make up for all the thermal loss. All of these issues become the tenants issues by winter. At my last job, we specified spray-foam (USA Insulation Co.) for a [single-family] residential property in Shaker Heights (Cleveland, OH neighborhood)–and this stuff works!!

    The company is able to insulate EVEN behind plaster on wood lath backing. They can also spray between ceilings and subfloors. The energy benefits and thermal retention at exterior walls is remarkable, and the foam dampened the exterior noise so much that the house owners were unaware + undisturbed by a thunderstorm a few days later. Also, this spray foam has is non-hazardous, provides for better indoor air quality (compared to fiberglass insulation), and termites/rats/critters have a harder time fighting through this (the company claims critters cannot sustain themselves in it).

  • Dustin:

    The energy efficiency tax credit comes in the form of an income tax credit. So you would deduct these expenditures on your taxes at the end of the year. That’s how I understand it at least.

  • Dustin Clark

    gotcha, thanks for the response Randy. I will show and gather support to this Bill–I think it is great!