Commercial building owners may not realize it, but there are tax deductions available through the Internal Revenue Service that benefits their businesses. In an effort to encourage American businesses to lessen their carbon footprint, the Section 179 Expense Deduction was introduced. Any commercial building that is designed to be more energy efficient has the potential to qualify for this tax deduction. In fact, you may have government money waiting to be claimed per Section 179D.
Tax Deductions for Energy Efficient Buildings
The Section 179D tax credit enables a taxpayer to enjoy a tax deduction for energy efficient commercial buildings that were placed into services from January 1, 2006 until December 31, 2013. They type of energy efficient installations that are valid for this type of tax deduction are HVAC systems, building envelopes, hot water systems and energy efficient lighting. There are energy efficient standards in place that commercial buildings must meet in order to qualify for a significant savings concerning their taxes. The best way to find out if you qualify for this type of tax deduction is to have a building inspected by a professional engineering firm.
Types of Commercial Buildings that Benefit from this Type of Tax Savings
There are many types of commercial buildings that can benefit from Section 179D tax savings. The most notable are designers of commercial buildings, engineering and architectural firms, and commercial real estate developers. The actual tax deduction is based on the square footage of a premise.
Who Really Benefits the Most from this Tax Deduction?
Architectural firms and engineering firms stand to benefit the most from significant savings when filing taxes with a 179D. This is due to the fact that government buildings cannot use the tax deduction, but can pass down the actual deduction to architects, designers and engineers. Commercial buildings that qualify for these types of tax deductions include those that incorporate energy efficient retrofit lights and thermal and geothermal storage. In order to properly identify these items as being cost efficient concerning energy efficiency, the costs need to be segregated. This allows the true value to be identified once the retrofit is completed.