A lot of people assume that the federal bailout law is all about helping banks and buying toxic mortgage portfolios. That's true, but Congress included some important tax items in the Emergency Economic Stabilization Act that could be of immediate use by owners and developers of investment real estate.

Tops on the list of winners: Anybody who builds or renovates properties using "alternative energy" features - especially solar panel applications. The bill extended a 30 percent federal tax credit for the next eight years for new commercial and residential solar installations - that means everything from multifamily rental projects to retail and commercial office buildings.

Plus the bill removed the previous $2,000 tax credit cap for residential solar electric installations.

Beyond solar, investors who take the next step and incorporate some form of what Congress calls "small wind power" into existing or new commercial and residential investment properties can qualify for a 30 percent tax credit, up to $4,000, for wind turbines with capacities of 100 kilowatts or less.

The federal tax credit can be in addition to any state or local credits currently available to buyers and owners of properties incorporating solar or other alternative energy features.

Federal tax credits for fuel cells and microturbines are extended through 2016, and the fuel tax credit limit is tripled, to $1,500 for each half kilowatt of capacity.

The new law also created a 10 percent tax credit for certain combined heat and power systems and for geothermal heat pumps.

On top of all this, the law extended the energy efficiency tax credit for commercial and residential real estate through 2013, along with credits for single family home retrofits that are installed during 2009.

If you plan to build one or more new houses, the bailout law provides generous tax credits for properties that qualify under the federal government's definitions of "energy efficient" houses. That covers everything from green building materials, lighting, heating and airconditioning, and household appliances.

To help investors and other taxpayers take maximum advantage of all the credits, the law also increases the income tax limits for the Alternative Minimum Tax (or AMT), and allows unused energy tax credits to be carried over to the property owner's next tax year.

And finally, just in case you want to drive to your energy-efficient real estate using a fuel other than gasoline, the law also provides up to a $7,500 tax credit for plug-in hybrid vehicles!

Published: October 17, 2008

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.