Commercial Building Tax Deduction- EPACT / IRC Section 179D

There are federal tax deductions of up to $1.80 per square foot available to commercial building owners under the federal Energy Policy Act of 2005.  The deductions are currently available through December 31, 2013, and are set out in Section 179D of the Internal Revenue Code.  This is an opportunity in both new construction, and existing buildings.

The categories of energy efficiency improvements that may be eligible for the deduction include:

interior lighting;

building envelope; and

heating, cooling, ventilation, or hot water systems.

While some other system improvements (e.g. kitchen improvements) may contribute to overall energy savings, they will not factor into determining eligibility for the Section 179D deductions.

To get the full deduction of $1.80 per square foot the energy use needs to be reduced to fifty per cent (50%) of a building meeting the minimum requirements set out in ASHRAE Standard 90.1-2001.  However, partial deductions of up to $0.60 per square foot are allowed where  partial measures will reasonably contribute towards meeting the fifty per cent (50%) target were additional measures added later.

The energy efficiency improvements need to be modeled with selected computer software.  Decent Energy, Inc., can conduct the modeling and provide you with the required certification in connection with using the Section 179D deduction, together with other incentives that may be available.