Construction and Real Estate News

A quarterly publication discussing risk management, accounting, and tax news for construction and real estate developers. 

Energy efficient home credit
Through the passage of the Tax Relief and Job Creation Act of 2010, the energy efficient home credit (the "45L credit") which provides eligible contractors with a $2,000 tax credit for each energy efficient dwelling unit, has been extended through the end of 2011. There have been discussions about extending the program past 2011 but an extension of this program past 2011 is currently uncertain.

Accounting insights from Construction and Real Estate
Of the four Accounting Standards Updates (ASUs) recently finalized by the Financial Accounting Standards Board (FASB), one may have a significant impact on companies in the construction and real estate industries. ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in US GAAP and IFRS supersedes most of the guidance in Topic 820 in what was previously known as Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements. Of particular interest is the clarification of how to apply the concept of highest and best use to nonfinancial assets and additional disclosure requirements related to the measurement of assets and liabilities whose values are based on "unobservable inputs" (Level 3 in the fair value hierarchy). Private companies will be exempt from certain new disclosure requirements.

FASB and the International Accounting Standards Board (IASB) have also been discussing the changes to lease accounting that have potential impacts to both lessees and lessors. These discussions have led to potential changes to accounting for and presentation of investment property. FASB is currently writing a proposed update to address these issues.

Read more in these two recent articles:

• FASB issues new standards for fair value measurement and disclosures
• Investment properties at fair value

Remodeling existing homes seen as the next big thing in green building
Interest in third-party green certification programs for homes continues to climb, with nearly 2,200 projects certified to the National Green Building Standard , according to the NAHB Research Center, which administers the verification and certification program.

Program growth is especially noticeable among production homes and in multifamily projects, said Michelle Desiderio, director of green building programs at the Research Center.

On the other hand, the housing industry is still struggling with appraisal issues, and those issues are compounded in many markets when builders go green.