Did you know that small businesses may be eligible for tax incentives for energy-efficiency upgrades made to commercial buildings? The way the credits work for commercial buildings (non-residences that pay taxes) is that you need to show energy saved and do not automatically get credit for installing an ENERGY STAR qualified unit or product, which is different than the way incentives are given for residential credits. Per IRS notice 179D, 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. The credits are being administered by the IRS, so although ENERGY STAR can provide you with general information, if you need specific details you may need to speak with your accountant or a representative from the IRS. For information on what falls under the categories “building envelope, lighting, or heating and cooling systems”, how to actually measure energy savings, and how to apply for the credits see the following links.
Federal Tax Credits for Consumer Energy Efficiency
If you purchase an energy-efficient product or renewable energy system for your home, you may be eligible for a federal tax credit. Below you will find an overview of the federal tax credits for energy efficiency.
Please note, not all ENERGY STAR qualified products qualify for a tax credit. ENERGY STAR distinguishes energy efficient products which, although they may cost more to purchase than standard models, will pay you back in lower energy bills within a reasonable amount of time, without a tax credit.
Energy Star Tax Deductions for Commercial Buildings
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.
Database of State Incentives for Renewables & Efficiency: DSIRE is a comprehensive source of information on state, local, utility and federal incentives and policies that promote renewable energy and energy efficiency. Established in 1995 and funded by the U.S. Department of Energy, DSIRE is an ongoing project of the N.C. Solar Center and the Interstate Renewable Energy Council.