A tax deduction of up to $1.80 per square foot is available to owners or designers of new or existing commercial buildings that save at least 50% of the heating and cooling energy of a building that meets ASHRAE Standard 90.1-2001. Partial deductions of up to $.60 per square foot can be taken for measures affecting any one of three building systems: the building envelope, lighting, or heating and cooling systems. These tax deductions are available for systems “placed in service” from January 1, 2006 through December 31, 2013.

Incentive Type: Corporate Deduction
Eligible Efficiency Technologies: Equipment Insulation, Water Heaters, Lighting, Lighting Controls/Sensors, Chillers, Furnaces, Boilers, Heat pumps, Air conditioners, CHP/Cogeneration, Caulking/Weather-stripping, Duct/Air sealing, Building Insulation, Windows, Doors, Siding, Roofs
Applicable Sectors: Commercial, Construction
Amount: $0.30-$1.80 per square foot, depending on technology and amount of energy reduction
Maximum Incentive: $1.80 per square foot
Equipment Requirements: Must meet certification requirements.
Website: http://www.efficientbuildings.org
Authority 1: 26 USC § 179D
Date Enacted: 8/8/2005 (Amended 2008)
Effective Date: 1/1/2006
Expiration Date: 12/31/2013
Authority 2: H.R. 1424: Div. B, Sec. 303 (The Energy Improvement and Extension Act of 2008)
Date Enacted: 10/3/2008
Expiration Date: 12/31/2013

Summary:
The Energy Policy Act of 2005 established a tax deduction for energy efficient commercial buildings applicable to qualifying systems and buildings placed in service from January 1, 2006 through December 31, 2007. This tax deduction was subsequently extended through 2008 and then again through 2013 by section 303 of the Energy Improvement and Extension Act of 2008 (H.R. 1424, Division B).

A tax deduction of $1.80 per square foot is available to owners of new or existing buildings who install (1) interior lighting; (2) building envelope, or (3) heating, cooling, ventilation, or hot water systems that reduce the building’s total energy and power cost by 50% or more in comparison to a building meeting minimum requirements set by ASHRAE Standard 90.1-2001. Energy savings must be calculated using qualified computer software approved by the IRS. Click here for the list of approved software

Note that the eligible technologies listed above are provided as examples and do not represent an official list specified in the statute.

Deductions of $0.60 per square foot are available to owners of buildings in which individual lighting, building envelope, or heating and cooling systems meet target levels that would reasonably contribute to an overall building savings of 50% if additional systems were installed.

The deductions are available primarily to building owners, although tenants may be eligible if they make construction expenditures. In the case of energy efficient systems installed on or in government property, tax deductions will be given to the person primarily responsible for the systems’ design. Deductions are taken in the year when construction is completed.

The IRS released interim guidance (IRS Notice 2006-52) in June 2006 to establish a process to allow taxpayers to obtain a certification that the property satisfies the energy efficiency requirements contained in the statute. IRS Notice 2008-40 was issued in March of 2008 to further clarify the rules. NREL published a report (NREL/TP-550-40228) in February 2007 which provides guidelines for the modeling and inspection of energy savings required by the statute.

Click here for answers to frequently asked questions provided by the Commercial Building Tax Deduction Coalition.

Commercial Building Tax Deduction Resources:
• ENERGY STAR Challenge: challenge to find the best opportunities for energy savings, set goals for improvement, and achieve superior energy efficiency.
• Energy Efficient Commercial Building Tax Deduction Certification (required per IRS to claim deduction)
• IRS Notice 2006-52 (6/2/2006): provides guidance on deduction for energy efficient commercial buildings
• IRS Notice 2008-40 (4/7/2008) – Amplification of Notice 2006-52
• Qualified Software for Calculating Energy Savings
• Commercial Building Tax Deduction Coalition
• Tax Incentives Assistance Project (TIAP)
• Energy Policy Act of 2005 PDF
• Emergency Economic Stabilization Act of 2008 PDF
• Department of Energy Web site on Tax Incentives
• Database of State Incentives for Renewables & Efficiency

SourceCorp Can Help
SourceCorp provides Energy Efficient Commercial Building Tax Deduction Certification (per IRS requirements to claim the deduction) to help companies pay less tax and save more money. If you believe you qualify for this deduction and want to increase your cash flow:

Click here for more information

A tax deduction of up to $1.80 per square foot is available to owners or designers of new or existing commercial buildings that save at least 50% of the heating and cooling energy of a building that meets ASHRAE Standard 90.1-2001. Partial deductions of up to $.60 per square foot can be taken for measures affecting any one of three building systems: the building envelope, lighting, or heating and cooling systems. These tax deductions are available for systems “placed in service” from January 1, 2006 through December 31, 2013.

• Free Federal Tax Deduction Review: for buildings 50,000 sq. ft. or greater, a complimentary analysis to see what your reduced tax liability and increased cash flow would be
• IRS Notice 2006-52 (6/2/2006): provides guidance on deduction for energy efficient commercial buildings.
• IRS Notice 2008-40 (4/7/2008) – Amplification of Notice 2006-52
• Qualified Software for Calculating Energy Savings
• Commercial Building Tax Deduction Coalition
• Database of Incentives/Deductions: Comprehensive source of information on state, local, utility, and federal incentives that promote renewable energy and energy efficiency
• Energy Efficient Commercial Building Tax Deduction Certification
• State Energy Efficiency Policy Database
• Tax Incentives Assistance Project (TIAP)
• Department of Energy Tax Incentive Information
• Federal Tax Credit Information
• U.S. Green Building Council
• Commercial Green Building Certification (LEED)
• Local Government Programs
• LEED Initiatives in Government and Schools

Additional Resources:
• DOE’s High Performance Buildings Web site: features projects with reliable energy performance data and exemplary energy performance
• The Federal Energy Management Program: showcasing federal projects
• The Cascadia Chapter of the U.S. Green Building Council: displaying projects located in British Columbia, Washington, and Oregon
• Efficiency Vermont: showcasing energy efficient and high performance buildings located in Vermont

Energy Efficient Commercial Building Tax Deduction:
To learn more about the Energy Efficient Commercial Building Tax Deduction or to schedule a no-cost, no-obligation Green Building Tax Deduction Analysis to see what your benefit would look like, please visit: SourceCorp Green Building Tax Deduction

About SourceCorp Professional Services:
Celebrating our 25th year in business, SourceCorp Professional Services is the leading provider of Energy Efficient Commercial Building Tax Deductions, R&D Tax Credit Studies, Cost Segregation Studies, and LIFO Accounting in the U.S. SourceCorp serves many of the nation’s most prominent CPA firms, Associations, and Fortune 1000 companies.