It still isn't easy being green – For a REIT
A discussion of selected tax developments and considerations
Numerous federal incentives have been enacted to accelerate capital investment in renewable energy and conservation technologies including the production tax credit, the investment tax credit, bonus depreciation, Internal Revenue Code Section 179D expense deductions, and cash grants. The “greening” trend continues to accelerate, as many states have adopted a variety of renewable portfolio standards which require or promote minimum thresholds of power generation from renewable sources. Several states have also adopted renewable energy certificate programs creating an open market for certificates that can be traded among multiple parties.
In this point of view, we will analyze the interplay between real estate investment trusts (REITs) and energy-related incentives and explore the emerging and evolving landscape of REIT requirements and these valuable energy incentives. We will use solar renewables as a focal point for the discussion to explore the use of REITs as a vehicle to finance capital investment into renewables, while leveraging the REITs’ status as an entity with a single level of tax and an increasingly popular form of investment, both public and private.