Over the last century, greenhouse gas emissions have been on the rise, in turn leading to climate change. The change in climate will have a huge impact on the housing market and will increase the carrying cost of owning a home, specifically, an increase in the cost of utilities
According to the Environmental Protection Agency, the greenhouse gases added by humans to the Earth's atmosphere increased by 45 percent from 1990 through 2019. However, since 2005, the greenhouse gas emissions in the United States have decreased by 12%. There are many reasons for the increase in greenhouse gas emissions:
- Burning coal, oil, and gas produces carbon dioxide and nitrous oxide.
- Increasing livestock farming.
- Fertilizers containing nitrogen produce nitrous oxide emissions.
- Fluorinated gases are emitted from equipment and products.
To aid in the continuation of the fight against this global problem, the Internal Revenue Service offers taxpayers the opportunity to claim a tax credit if they aid and assist in the capture of carbon oxide. This tax credit is known as Section 45Q.
The 45Q credit
The 45Q credit , the tax credit for carbon sequestration, was created to encourage taxpayers to invest in carbon oxide sequestration and capture. The investment is intended to help the world combat global warming.
What is carbon sequestration
In simplest terms, carbon sequestration is the process of removing carbon from the atmosphere, securing it, and storing it.
How to claim the credit
Taxpayers who own carbon-capture equipment are eligible to claim the credit on IRS Form 8933. The credit is calculated per metric ton of qualified carbon oxide captured and sequestered, and the amount of the credit depends on when the qualifying capturing equipment was placed in service. For taxpayers to claim the credit, the emissions must be measured at the point of capture as well as at the point of disposal, injection, or other use. If the captured carbon oxide is intended to be sequestered, it must be disposed of in "secure geological storage."
Millionacres bottom line
Greenhouse gas emissions are on the rise, and the rise in emissions will most assuredly impact the real estate market. To help combat this global problem, the Internal Revenue Service has made an attempt to incentivize the capture of greenhouse gases with the 45Q credit. This credit is a win for both the taxpayer and the environment. Any taxpayer who is able to invest in carbon-capture equipment should take advantage of this opportunity.