179D Federal Energy Tax Deductions – We Have The Answers To Your Questions
What are the requirements?
Must reduce total annual energy and power costs with respect to the interior lighting, systems, heating, cooling, ventilation and hot water systems by 50%, but partial deductions are allowed; Energy simulation is required to justify the deduction; inspection and testing must be completed by a qualified engineer or contractor registered in the jurisdiction.
How much is the deduction?
- Maximum deduction – $1.80 per square foot = 50% reduction in total annual energy and power costs (compared to a reference building that meets the minimum requirements of ASHRAE Standard 90.1-2001); not to exceed the amount equal to the cost of energy efficient commercial property placed in service during the taxable year.
- Partial deduction – $.60 per square foot = 16 2/3% reduction for building envelope, HVAC and service hot water systems and lighting
- Partial deduction (interim lighting) – $.30 – .60 per square foot = 25 – 40% reduction in lighting power density (50% in the case of warehouses)
What qualifies?
- Commercial buildings (any size)
- Apartments, four or more stories, for lease
- Commercial energy renovations
Who qualifies for the deduction?
- Building owner at the time of building improvements
- Public buildings – the owner may allocate the deduction to the designer (architect, engineer, contractor, environmental consultant or energy services provider) for the taxable year that includes the date on which the property is placed in service
What is the time frame for eligibility?
Units must be completed or renovated after December 31, 2005 but before January 1, 2013
What is needed from the builder?
- Current full set of architectural plans that includes all specifications
- Energy compliance documents for lighting, HVAC and envelope (Title 24 or IECC)
- EnergyPro File – computer file used to generate T-24 documentation
- A contact person and phone number
What do I get from a 179D review?
- FTD certificate package – requires documentation for deduction
- Provide review of existing T-24 or IECC to verify compliance with current code requirements
- Review building lighting, HVAC and envelope systems for Federal Tax Deduction qualification
- Contract for analysis and certification documentation
How do I claim the deduction?
- The deduction is taken on the “Other Deductions” line of the taxpayer’s return
- Tax returns may be amended going back three consecutive tax years
ETS will provide you with a summary of compliance, Department of Energy certified software and engineer or contractor verification documentation. According to your preference, ETS will provide all documentation in either paper or electronic format.
To learn more about the Energy Policy Act, sign up for one of our monthly webinars or view our video.
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