The Shelter Act, introduced by Sens. Michael Bennet, D-Colorado, and Bill Cassidy, R-Louisiana, and Reps. Gus Bilirakis, R-Florida and Charlie Crist, D-Florida, would allow the writing off of 25% of qualifying mitigation expenses, from strengthening the durability of a roof to elevating a housing unit to reduce potential flood damage, according to a summary of the legislation.
Despite hundreds of billions of taxpayer dollars spent on disaster recovery each year, there are currently no federal tax incentives to encourage mitigation.
The tax credit has an annual limit of up to $5,000 per taxpayer. Eligible properties include homes or businesses in or adjacent to an area that the federal government has declared a disaster within the past 10 years. Taxpayers who rent a property in eligible areas can also receive the credit. The credit, establishing section 25E and 25T in the tax code, begins to phase down for households that earn more than $168,000 for joint filers and phases out entirely for households that earn more than $250,000. For businesses, the credit begins to phase down when a business earns $5 million and phases out completely when its revenue is more than $10 million.
Examples of Qualifying Disaster Mitigation Expenditures: Improving the durability of a roof covering, impact-resistance (minimum class 3 or 4), or fire-resistance of a roof covering (minimum class A); activities in FEMA’s Publication 804, Wind Retrofit Guide for Residential Buildings; elevating the qualified dwelling unit above the base flood elevation or other applicable minimum elevation requirement; check valves to prevent flood water from backing up into drains; flood vents, breakaway walls or open lattice for homes located in V zones, designed and certified flood resistant buildings, and automatic shutoff valves for water and gas lines; exterior walls, doors, windows, or other exterior dwelling unit elements that conform to
ignition-resistant construction standards; performing fire maintenance procedures identified by the Federal Emergency Management Agency or the United States Forest Service, including fuel management techniques such as creating fuel and fire breaks; weather data to better understand the local climate and drought history., and property that received the Department of Homeland Security’s Resilience Star or a FORTIFIED home or FORTIFIED commercial designation from the Insurance Institute for Business and Home Safety.
The hazard mitigation expenditure must in compliance with the latest published editions of relevant consensus-based codes, specifications, and standards or any more restrictive federal, state, or local floodplain management standards and consistent with floodplain management regulations. Taxpayers would be required to submit a summary of their hazard mitigation investment to the Internal Revenue Service.
Support for the Shelter Act: BuildStrong Coalition, Federal Alliance for Safer Homes, Insurance Institute for Business & Home Safety, National Association of Home Builders, National Ready Mix Concrete Association, National Realtors Association, The Smarter Safer Coalition, and The Home Depot.