If your business needs another reason to build green, here it is: energy-efficiency tax deductions. The 2008 Emergency Economic Stimulus Act extended the deduction for energy-efficient commercial buildings.
These deductions, up to $1.80 per square foot for certain properties, were established to offset the costs of constructing energy-efficient buildings and can result in increased cash flow for your firm. This additional cash can be a great benefit for any business looking to make the most of their resources.
These deductions apply to improvements that exceed the 2001 building energy code standards by at least 50%. The provision is related to reduced energy consumption in three areas:
- The building envelope;
- Heating, cooling, ventilation and hot water systems (HVAC); and
- Interior lighting systems.
- The deduction is calculated based on the total improved square footage of the building.
Until 2011, the deduction was required to be taken in the year the qualified property was placed into service or by amending tax returns (limited to the prior three years). However, it may not be too late to benefit from qualified energy-efficient property installed in previous years. As a result of recent IRS provisions, you can now take the tax deductions for qualified energy-efficient property as far back as 2006.
Owners and tenants of commercial properties who have built, retrofitted or installed leasehold improvements can benefit from these deductions. Architects, engineers and contractors who are the primary designers of government-owned energy-efficient buildings can also benefit. Government entities cannot benefit, but they can allocate deductions to the primary designer.
Energy-efficiency tax deductions provide an excellent opportunity to lower taxes right now. Speak with a qualified commercial tax credit or commercial real estate attorney to find out more about how you can benefit from these deductions.
Original article - SCBJ