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IRS Information on Commercial Building Tax Deductions
In June 2006, the U.S. Internal Revenue Service issued an advance copy of a notice on how commercial building owners or leaseholders can qualify for a federal tax deduction by making their buildings more energy efficient.
The certification must include a field inspection of the building after the building is placed in service to confirm that the building has met the savings goals. Specific inspection and testing procedures are being developed by the National Renewable Energy Laboratory and will be posted on the web when completed. Certifiers must also provide the building owner with an explanation and list of the energy efficiency features of the building and the projected annual energy costs.
The National Lighting Bureau has created a brochure New Tax Incentives Make High-Benefit Lighting Less Expensive Than Ever Before about how the tax incentives encourage high-efficiency indoor lighting. For lighting systems, until the IRS issues a final rule, the law specifies that a deduction of $0.30 per square foot can be taken if the lighting system employs dual switching (ability to switch roughly half the lights off and still have fairly uniform light distribution) and reduces installed lighting power by at least 25 percent from values specified in specific cited tables in ASHRAE Standard 90.1-2001. As lighting power reductions climb from 25 to 40 percent, the deduction is increased proportionally, up to $0.60 for a 40 percent power reduction (plus the dual switching). This prorated credit does not apply to warehouse lighting.
More information on tax incentives is available at the Tax Incentives Assistance Project and the Commercial Building Tax Deduction Coalition.