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The tax advantages offered by the EPAct 179D are structured in such a way as to encourage businesses to incorporate energy efficiency systems into their structures. Doing so can have a significant economical impact on a business in its efforts to operate in a financially solvent manner. During periods of economical downturn, this type of tax relief can make a noticeable difference.
The EPAct 179D tax incentive relates directly to the design of commercial building properties that incorporate energy-efficiency systems. Up to $1.80 per square foot is the tax incentive allowable qualifying structures under the EPAct 179D. The incentive also allows a retroactively granted deduction for any existing facilities that fall under specific guidelines.
The tax deduction allows commercial builders to offset some of the expenses and costs of implementing energy-efficiency improvements. In normal situations, it could take as much 30+ years to recover depreciation costs for improvements, but the tax incentive encourages businesses to take advantage of its availability. Unfortunately, many businesses aren’t aware that the tax deduction even exists, however, realizing the benefits can be a deciding factor.
How to Qualify for EPAct 179D
A qualified engineer or contractor must inspect and test the improvements before a deduction is given. The energy-efficient improvements must be at least a reduction of 50% of the total energy and power costs in order to qualify. This reduction must be evident in the heating, cooling, ventilation and hot water systems of the structure. Partial deductions are allowed in some cases and the information to determine that is gleaned from the engineer or contractor’s reports.
Qualifying Factors for the EPAct 179D
Businesses can determine if they want to take advantage of this tax incentive by analyzing the company and its structure. Basically, any size commercial buildings and apartments that are more than four stories high are eligible. Owners of public building structures are qualified individuals, although they may allocate the deductions to the engineer, contractor, architect, environmental consultant or energy services provider. This is only valid for the date of the taxable year that the property was deemed serviceable.
Although not all businesses will qualify for the tax deductions, some projects can be pre-qualified beforehand to determine any eligibility. This route allows building owners to avoid any installation costs if his project is deemed ineligible for the tax incentive.
Steve Nanos
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