ENERGY TAX CREDITS

Energy Tax Credits

You may be eligible for a tax deduction of up to $1.80 per square foot for improving the energy efficiency of your existing commercial buildings or designing high efficiency into new buildings. The Energy Policy Act of 2005 includes a tax deduction for investments in “energy efficient commercial building property” designed to significantly reduce the heating, cooling, water heating, and interior lighting energy cost of new or existing commercial buildings. To be eligible, the energy-efficient commercial building property—such as a state-of-the-art lighting system—must be placed in service between January 1, 2006 and December 31, 2013.

To qualify for the full deduction ($1.80 per sq. ft.) a building owner must make investments designed to reduce energy costs by at least 50%. A partial deduction, and more likely to qualify, of up to $0.60 per square foot is available for investments in one of three systems: lighting, heating and cooling or building envelope-designed to reduce energy costs by 16 and 2/3% (one third of the 50% requirement).

Tax deductions reduce your overall taxable income with the value of the deduction
dependent on your tax bracket. Tax credits, such as the ones provided for consumers in the 2005 Energy Policy Act, reduce the amount of tax you owe dollar for dollar.

Who Can Benefit from the Deduction?
The person or organization that pays for construction is generally the recipient of the
deduction. This is usually the building owner, but for some HVAC or lighting efficiency
projects, it could be the tenant. For government-owned buildings, the person primarily
responsible for designing the building or project may be able to claim the deduction.

What can you do today to be ready?
Establish the energy use of your building(s) and set a savings.

It is hard to manage what we do not measure. With new easy to use energy use tracking tools, you can establish the current energy use of your building(s) and determine a reasonable energy savings goal. This is the first step in many effective energy savings programs, and will help you identify the best opportunities to qualify for the tax deduction.

Call IGNCT today to get a free consultation on Energy tax credits for New construction & existing structures.