Tax Benefits for Energy Efficient "Designers"

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by: Lucywo
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Date: Tue, 20 Apr 2010 Time: 3:07 AM
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There is help available for businesses that are trying to prosper during this turbulent economic period. The Energy Efficient Commercial Building Deduction that offers energy efficiency tax deductions for assets/materials in buildings was extended through 2013.

While some of this assistance may come from bailouts and banks, there are other avenues also well worth researching. For example, a lesser-known corporate tax incentives for energy-efficient building materials and environmental controls for commercial buildings could offer property managers valuable financial breaks.

This is largely a result of the Emergency Economic Stabilization Act (EESA), that former President Bush enacted in October 2008. As part of the package, the Energy Efficient Commercial Building Deduction (EPACT2005, Title 13) was extended for another five years - through December 31, 2013.

This extension of the deduction gives property managers planning new buildings or retrofits plenty to consider since they cover improvements ranging from equipment such as interior lighting to HVAC/duct/air sealing and insulation, roofs, siding and other building materials. Everything used must meet specific certification requirements in order to qualify for the deductions.

According to the Commercial Building Tax Deduction Coalition, a tax deduction per square foot is permitted for owners who install equipment that reduces the building's total energy and power cost by 50 percent or more in comparison to a building meeting minimum requirements set by ASHRAE Standard 90.1-2001 - or by 16 2/3 percent for one of three subsystems: lighting, HVAC and water heaters and the building envelope. "Everyone is more mindful of energy consumption these days," says Mike Kluber director of engineering firm Kluber Skahan + Associates, Inc. in Batavia, IL and a Certified Energy Manager who is also LEED-certified. "When looking at maintenance plans for your new or replacement equipment, don't just look at maintaining it but seek better performance."

Plus, designers and builders that are participating in other energy efficiency programs, such as LEED by the U.S. Green Building Council or the U.S. EPA's Energy Star, may already qualify for certain deductions for energy-saving materials and equipment.

To claim the tax deduction, Kluber says qualified individuals are required to complete statements involving energy efficiency and typically, requests are made by the building owner or property manager and passed on to the tax professional in order to prepare the tax return documentation. A few components include:

 The engineer's qualifying statement, which demonstrates how the building complies with required standards
 Required field inspection to prove the use of energy-saving materials or equipment
 Statement of how calculations are performed for each type of equipment or material used. For most items, except lighting, specific software is required.

"Programs like the EESA tax deduction give plenty of reasons, opportunity and education to achieve energy savings. Plus, it's good stewardship," Kluber concludes.

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Capital Review Group