Architects, engineers and contractors can get wonderful energy efficient commercial building incentives under EPAct 179D. Boosting the energy efficiency of the units is possible in numerous ways and lighting projects classify as one of the easiest to execute opportunities.
Through the use of the tax deduction, investors may fully depreciate the cost of purchasing energy efficient lighting. Having a good idea about the terms and the conditions will be the key to picking the best option on the market and making the most under the EPAct 179D incentive.
To qualify for the incentive, a commercial building should consume 50 percent less electricity for HVAC purposes than a comparable property in the same region. If the design doesn’t meet the 50 percent requirement, it could still qualify for a partial deduction.
The execution of a lighting project is one of the simplest and most efficient possibilities for getting a partial deduction. In this case, the incentive will total 0.6 dollars per square foot, rather than the entire amount of 1.8 dollars per square foot.
For partial improvements, the lighting must produce 25 percent reduction in energy consumption. Under EPAct 179D, 15 percent of the reduction should stem from HVAC improvements and another 10 percent need to come from building envelope modifications.
Alternative Evaluation Methods for Lighting Improvement
Architects and engineers can use interim lighting rules and alternative methods of evaluation, in case solely lighting improvements have been carried out under EPAct 179D.
It’s possible to do a watts per sq. ft. calculation in an attempt to measure the energy efficiency of the lighting installation. The lighting will need to be anywhere between 25 and 40 percent more energy efficient than standard possibilities for commercial buildings.
If the lighting corresponds to the alternative method of evaluation criteria, the EPAct 179D tax deduction will be in the range from 0.3 to 0.6 dollars per square foot. Under this possibility, the lighting system should come with an automatic shut off feature and a bi-level switching component.
Types of Energy Efficient Lighting
LED lights and induction lighting are both great possibilities for getting a taxation incentive connected to commercial building energy efficiency.
The electricity savings that LED lights are capable of producing can be nearly 75 percent lower than the energy consumption of standard bulbs. The use of such lights is one of the easiest possibilities for getting an incentive totaling 0.6 dollars per square foot of property.
Induction lights are also preferred by many contractors because of the relatively low maintenance costs and the excellent energy efficiency these provide. Apart from qualifying the property for the EPAct 179D tax incentive, induction lights will also bring a very high return on investment in the long run for the owner of the property. This characteristic will make commercial units much easier to sell and it will also bring the value up.
A Few Additional Terms and Conditions
The building has to be certified by a third party prior to claiming the 179D incentive. The qualified assessment professional will compare the unit to a similar one and figure out the electricity savings that it produces.
The effective timeframe of the provision is from January 1, 2006 to December 31, 2014. EPAct 179D was extended retroactively in the end of 2014 to cover all of the projects executed through the year. Architects, engineers and contractors alike can claim the incentive provided under Section 179D.
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