The Ins And Outs of 179D

The 179D tax deduction rewards commercial builders whose efforts to increase energy efficiency surpass industry standards. The higher a newly-constructed building’s energy efficiency is, the higher the deduction they will receive.

This provision measures the efficiency of a building in three ways: the lighting, the building’s envelope and its HVAC system. Interestingly, technology doesn’t play a role in 179D. Success is what is rewarded with this provision, and not the technology used to achieve it. This has resulted in much innovation and several new ideas for how to increase the efficiency of commercial buildings.

To ensure that the energy saved with a newly-constructed green building is accurate, the provision requires independent certification to be obtained after a building has been put into service. Usually, a licensed engineer executes the certification.

Governments Also Encouraged to Build Green

179D encourages government at all levels to go green with their new buildings. Here, tax deductions get passed to the building’s designer. This has proven to be a much-welcomed event for those smaller engineering, architecture and construction companies in the country, because these deductions have allowed thousands of construction jobs have been created and continue to be able to be maintained. As well, national contracting, engineering and architectural organizations have been able to keep more money in their coffers instead of handing funds over to the IRS.

Advantages to Taxpayers

There is also a significant taxpayer benefit where 179D is concerned. The significant cost of energy inefficiency is usually passed on to the taxpayer, to the tune of $10 billion per year. According to the EPA, this amount could be reduced by as much as 30% if more energy-efficient buildings were being used.

Where school districts are concerned, more money per year is being spent on energy than on computers and textbooks combined – $6 billion per year. And inefficient usage of energy makes up one-third of that amount.

However, when energy efficiency is improved across state government, schools and local government, real cost savings are the result.

Although 179D expired at the end of 2013, it did receive an extension. This extension raised the energy standards, which will only encourage further efficiency. Builders, architects and engineers will now have to work harder to receive the deduction. However, this will only serve to benefit society as a whole.

The post Understand the Taxpayer Benefit and Energy Efficiency Rewards that the 179D Tax Deduction Offers appeared first on Claris Energy.

1. Different Lighting Methods

One of the most energy and cost efficient lighting methods on the market are LEDs. These will save businesses money in the long run while being efficient and eco-friendly. The estimated life of LEDs is 86,000 hours with little to no maintenance required. For a building that requires lights to be on all day, every day an LED lighting system will have a life of about ten years. 

2. Using Renewable Energy

A key element in energy efficiency is using renewable energy. This can come from many different sources and 50 percent of the items purchased for the building must be from renewable resources and use renewable energy. This is not as difficult as many may think as most products now focus on using renewable resources or energy. It is important to know that one of the biggest drains on energy for most buildings is hot water. The EPAct 179D requires that approximately 30 percent of hot water should be generated by solar power heating. 

3. Receiving Certification for the Deduction

An important part many forget is receiving a certificate for the incentive. An architect and engineer cannot simply inform the IRS that they have met the requirements. They will be expected to give documentation that they have met all regulations. In order to get an unbiased opinion, the builders must seek a third party individual to look through the building and craft the certificate for the builders. Once the certificate is complete, architects and engineers can send it into the IRS to apply for the 179D tax deduction.

4. Energy Consumption for Construction and Maintenance

When building an energy efficient structure, most may believe they only need to make the building efficient. This is not the case if they want to qualify for the EPAct 179D tax deduction. All aspects of the building process must be energy efficient and environmentally friendly. This includes the construction vehicles required for building, any electrical equipment needed, as well as all appliances that go in the building. Most construction vehicles do come with energy efficient models for individuals to choose, but many may not be aware of those vehicles. It is wise to ask about different environmentally friendly items before beginning the building

Building energy efficient structures will not only help architects and engineers receive the EPAct 179D tax incentive, but will also help businesses save money in the future. It will also have a better impact on the earth’s environment and will help bolster individual human health. For more information regarding the EPAct 179D, please contact Claris Energy today.

The post EPAct 179D: 4 Key Elements to Remember appeared first on Claris Energy.