ENERGY EFFICIENT BuILDING DEDUCTION
Energy Policy Act
The Energy Policy Act of 2005 (EPAct)1 added Code §179D. This provides up to $1.80 per square foot as an immediate tax deduction for building investments that achieve specified energy cost reductions above ASHRAE 2001 building energy code standards. A one time $1.80 per square foot deduction is the maximum tax deduction, but within the $1.80 deduction amount there are three potential subsystem tax deductions: up to 60 cents per square foot for lighting and lighting controls; HVAC (Heating ventilation and air conditioning); and the building envelope.The building envelope is the perimeter of the building including roof, walls, windows, doors and floor/foundation. Under current law, EPAct tax incentives are available for projects placed in service after December 31st, 2005.
Who Benefits...
Tax Advisors
• that understand the long term energy strategy have the opportunity to provide important advise regarding tax deductions.
Building Owners
• can substantially improve the economic payback related to sophisticated energy improvement investments.
Architects & Engineers
• are encouraged to provide expert energy reduction design to government buildings and award a tax incentive.
Energy Efficiency Studies Equal Substantial Tax Deductions
"The Energy Policy Act of 2005 created a new tax incentive for constructing energy efficient commercial buildings. Section 1331, the Commercial Building Tax Deduction, establishes a tax deduction for expenses related to the design and installation of energy efficient commercial building systems. This §179D deduction can only be claimed after obtaining a certification by an engineer or contractor that is properly licensed as a professional engineer or contractor in the jurisdiction in which the building is located. This certification is acquired by having an Ernst & Morris energy efficiency study performed." |
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