FEDERAL LIGHTING AND ENERGY INCENTIVES

federal solar energy incentives

179D July 2015 Updates Incentive as a Tax deduction

Summary: The Federal Energy Policy Act of 2005 established a tax deduction for energy-efficient commercial buildings applicable to qualifying systems and buildings placed in service from January 1, 2006, through December 31, 2016.

August 13, 2015/in EPAct 179D, IRS Section 179 Deduction, Section 179 Tax Deduction /by ddiaz

Have you heard that 179D is considered to be one of the best energy tax provisions to save jobs and careers? This tax deduction section focuses on Energy Efficient Commercial Buildings. There have been even more proficient proposed updates that allow additional savings over a longer period. This tax break not only benefits businesses, but also any building owners or tenants that qualify within the guidelines of section 179D. This tax provision expired in 2014 and has been moving forward to get final approval for a two-year extension including a few other expansions. Included in the bill was an expansion of 179D to include tribal governments and the expansion to not only state colleges and universities, but to private colleges and universities as well.

In a decisive decision, the Senate Finance Committee has approved a two-year extension on the tax extenders that officially expired the end of 2014. This extension of 179D through 2016 will not only help small businesses to save money on the total group of over 50 credits and deductions but individuals as well.

This in not only great news for the businesses that qualify but also for our country as a whole. Being more energy efficient is a benefit to all taxpayers. This two-year extension will allow even more buildings to be built and renovated to follow the energy efficient guidelines of 179D.
There is another great provision in the tax break that any designer and contractor that is working on any state, local government, or federal contracts can end up with thousands of dollars back into their company. This ideal tax break involves any newly constructed building or renovated building that meets the energy efficiency requirements.
There are certain modifications regarding the building that must be fulfilled to qualify for this deduction.

What to Expect in the Future
With tax breaks leaning towards more efficient energy consumption, there may be more renewals on 179D and an increase in the benefits as well. The future will hold more energy efficient commercial buildings with contractors, architects, and engineers saving thousands of dollars over these years.
The bottom line of this particular tax benefits is focused on energy efficiency and the incentive is so great that in time the commercial buildings will not be at the top of the list of the greatest consumption of our energy. Look for a possible increase in the deduction per square foot, which is currently at $1.80 to a possible $4.

With the Senate Finance Committee approval of the proposed extension, there is little doubt this will be reviewed by the Senate before the August recess. The 179D extension package may not be debated until well into October. However, with the current deadline of 2014 allows everyone meeting the current criteria to be able to take advantage of this tremendous tax break.
It is greatly anticipated that the Senate will vote in favor of the 179D extension bill. Of course once this task is agreed and approved, then the bill goes before the president to sign off on the bill.

FEDERAL INCENTIVES SUMMARY 2016

Incentive Type: Corporate Deduction, Federal applicable in all states

Eligible Efficiency Technologies: Equipment Insulation, Water Heaters, Lighting, Lighting Controls/Sensors, Chillers, Furnaces, Boilers, Heat pumps, Air conditioners, Caulking/Weather-stripping, Duct/Air sealing, Building Insulation, Windows, Doors, Siding, Roofs, Comprehensive Measures/Whole Building

Applicable Sectors: Commercial, Builder/Developer, State Government, Fed. Government (Deductions associated with government buildings are transferred to the designer)

Amount: $0.30-$1.80 per square foot, depending on technology and amount of energy reduction

Maximum Incentive: $1.80 per square foot

Equipment Requirements: Must meet certification requirements

Web Site: http://www.efficientbuildings.org

Authority 1: 26 USC § 179D

Date Enacted: 8/8/2005 (subsequently amended)

Date Effective:1/1/2006

Expiration Date:12/31/2016

Authority 2: H.R. 1424: Div. B, Sec. 303 (The Energy Improvement and Extension Act of
2008)

Date Enacted:10/3/2008

Expiration Date:12/31/2016

Summary: The Federal Energy Policy Act of 2005 established a tax deduction for energy-efficient commercial buildings applicable to qualifying systems and buildings placed in service from January 1, 2006, through December 31, 2016.

Federal Incentives Summary 2016

A tax deduction of $1.80 per square foot is available to owners of new or existing buildingswho install (1) interior lighting; (2) building envelope, or (3) heating, cooling, ventilation, or hot water systems that reduce the building’s total energy and power cost by 50% or more in comparison to a building meeting minimum requirements set by ASHRAE Standard 90.1-2001.

Deductions of $0.60 per square foot are available to owners of buildings in which individual lighting, building envelope, or heating and cooling systems meet target levels that would reasonably contribute to an overall building savings of 50% if additional systems were installed.

The deductions are available primarily to building owners, although tenants may be eligible if they make construction expenditures. In the case of energy efficient systems installed on or in government property, tax deductions will be given to the person primarily responsible for the systems’ design. Deductions are taken in the year when construction is completed.

The IRS released interim guidance (IRS Notice 2006-52) in June 2006 to establish a process to allow taxpayers to obtain a certification that the property satisfies the energy efficiency requirements contained in the statute. IRS Notice 2008-40 was issued in March of 2008 to further clarify the rules. NREL published a report (NREL/TP-550-40228) in February 2007 which provides guidelines for the modeling and inspection of energy savings required by the statute. For any additional specific questions you may contact:

Contact:
Public Information – IRS
U.S. Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, DC 20224
Phone: (800) 829-1040
Web Site: http://www.irs.gov

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