(1) Taxpayers are entitled to an energy conservation credit for energy conservation investments made to existing buildings and new construction. The energy conservation credit is available in the tax year that the taxpayer paid for and completed the installation of the energy conservation investments.

(2) For an existing building, an example of how the credit would be applied is:

(a) The taxpayer purchased and completed installation of an ENERGY STAR qualifying furnace in the taxpayer's home during October 2005, half of the total price of the furnace was paid for in 2005 and the other half in 2006. The energy conservation credit is available in tax year 2005 only and the taxpayer is not entitled to an additional energy conservation credit for the second half payment made in 2006.

(b) The taxpayer purchased a qualifying hot water heater in 2006 but did not have it installed until spring 2007. The energy conservation credit is available in 2007 only and the taxpayer can include the money expended in 2006 to purchase the hot water heater in calculating the credit.

(c) The taxpayer made a down payment in December 2006 to have qualifying windows installed in the spring of 2007. After the installation was completed in the spring, final payment was made. The energy conservation credit is available in 2007 only and the taxpayer can include the money expended in 2006 for the down payment in calculating the credit.

(3) For new construction, the energy conservation credit is available in the tax year that the construction is completed. An example of how the credit would be applied is:

(a) The taxpayer began construction of a new home in 2004 and finished it in 2005. The taxpayer invested in energy conservation measures that exceeded the 2003 International Energy Conservation Code with Montana amendments. The energy conservation credit is available in tax year 2005 only and the taxpayer is not entitled to an energy conservation credit for tax year 2004 even though the construction began in 2004.

(4) A taxpayer who purchases a newly constructed manufactured or modular home may claim the credit if they purchase the ENERGY STAR upgrade package. The amount paid for the package is considered the qualifying expenditure for the purpose of determining the amount of credit. For example, a taxpayer who spends an additional $1,800 for an ENERGY STAR upgrade can claim a credit of $450. 

(5) For multi-unit buildings such as apartment complexes and condominiums, an energy conservation credit will be allowed for each unit when it can be demonstrated that the expense was attributed to a specific unit. Examples of these expenditures are:

(a) an ENERGY STAR qualifying furnace that only serves one unit of a multi-unit building would qualify as one expenditure and one credit;

(b) an ENERGY STAR qualifying furnace that serves all units of a multi-unit building is considered only one energy conservation investment and would qualify as one expenditure and one credit; or

(c) installation of an ENERGY STAR qualifying furnace in each unit of a multi-unit building would qualify as a separate expenditure and credit for each unit.

(6) The energy conservation credit is available to all owners of a building who invest in energy conservation expenditures. Examples of this application are:

(a) A husband and wife replace windows and exterior doors with qualifying investments in their existing home for a total cost of $6,000. Each spouse is entitled to a maximum $500 energy conservation credit. ($6,000 x .25 = $1,500 with a maximum credit of $500 per individual.)

(b) Four individuals who own a commercial building replace windows, exterior doors and the heating system with qualifying investments for a total cost of $20,000. Each individual is entitled to a maximum $500 energy conservation credit. ($20,000 x .25 = $5,000 with a maximum credit of $500 for each individual.)