News

Did you reduce your commercial building’s energy consumption since 2006?

EPAct, or the "Energy Policy Act" of 2005, allows building owners to claim up to $1.8 per square foot of building space on their tax return. To put this in prospective, an owner of 100,000 square foot building would qualify for up to $180,000.00 of tax deduction on their business tax!

Recently Congress have extended this bill to include buildings that were completed up to 12/31/2017.

To qualify for this tax deduction, you must have completed a renovation in a building resulting in energy efficiency improvement or constructed a new building that is more energy efficient than what is required by code. Any renovation or new construction that was completed as of 2006 would qualify, this tax deduction can be achieved retroactively.

A building owner would need to engage a "Qualified Individual" as defined by the IRS to review the renovation completed or the new construction, analyze the performance of the building, and calculate the actual amount of tax deduction. once this process is completed, the Qualified Individual will issue a "Certificate of Tax Deduction".

Most if not all accountants know what to do with this certificate and how to file it for the owner to claim this deduction.

We have helped many clients over the years in achieving this deduction. We are confident that we can help you.

 

What is the Energy Policy Act of 2005?

The Energy Policy Act of 2005 reward building owners who invest in energy efficiency measures in their buildings by offering them a tax break on their business or personal tax.

How do I qualify for the maximum tax deduction?

To qualify for this tax deduction, you must have completed a renovation in an existing building resulting in energy efficiency improvement or constructed a new building that is more energy efficient than what is required by code.

The building must achieve energy cost reduction of 50% compared to a standard building to receive the maximum deduction.

Any renovation or new construction that was completed as of 1/1/2006 would qualify, this tax deduction can be achieved retroactively.

How do I know how efficient is my building?

A building owner would need to engage a "Qualified Individual" as defined by the IRS to review the renovation completed or the new building, analyze the performance of the building, and calculate the actual amount of tax deduction. once this process is completed, the Qualified Individual will issue the "Certificate of Tax Deduction".

What if my building is not 50% more efficient, can I get something?

The IRS allows for partial deductions. If your building is 20% more efficient than a standard building, you can achieve $0.60 per square foot. If your building is 40% more efficient than a standard building, you can achieve $1.20 per square foot. Finally, if you achieve 50% improvement, you can claim the full $1.80.

Does this require any special tax filling?

No, most if not all accountants know what to do with this information and are familiar with this certificate and how to file it for the owner to claim this deduction.

what information is needed from me to analyze my building?

All what is needed for the building analysis, is record drawing showing what improvement was completed in your building or construction documents showing the new building.

This is sounds like too much work, how complex is it really?

It is not complex at all. If you hire the right company, they will take the drawings from you perform their analysis and give you the "Certificate of Tax Deduction" which you will give to your accountant and you will be done!!