IRS Issues Guidance on Energy Efficiency Deductions for Commercial Properties
The Internal Revenue Service (IRS) just released its advanced notice detailing how commercial building owners or leaseholders can qualify for the tax deduction for making their buildings energy efficient. The Building Owners and Managers Association (BOMA) International welcomes these highly-anticipated guidelines to the energy efficient commercial buildings section of the Energy Policy Act of 2005, which will benefit the many commercial property owners and managers who are making significant changes and improvements to reduce energy consumption.
The Energy Policy Act, which was signed by President Bush last August, allows taxpayers to deduct the cost of energy-efficient property installed in commercial buildings for upgrades put into service from January 1, 2006 through December 31, 2007. The amount deductible may be as much as $1.80 per square foot of building floor area for buildings that achieve a 50-percent energy savings when compared to a reference building which meets the minimum requirements of ASHRAE Standard 90.1 – 2001. Buildings below the 50-percent threshold may also qualify for a deduction of up to 60 cents per square foot of building floor area if they meet a 16 2/3-percent energy savings target.
“The IRS notice is a crucial step in pushing forward the incentives of the energy bill,” remarked BOMA International Chairman, David W. Hewett, RPA, CPM, CCIM, FMA, CFM, principal for Trammell Crow Company, Auburn Hills, Michigan. “There has been a groundswell of activity among BOMA International members who are dedicated to conserving energy as a way to both cut building costs and to contribute to cleaner air and a healthier overall environment. We thank Congress, the Administration and the Department of Energy for working with us to help meet our energy efficiency goals.”
The IRS notice also establishes a process to certify the required energy savings in order to claim the deduction and explains how taxpayers can obtain certification. For full details click here.
BOMA International is a recognized and committed leader in the area of energy efficiency. BOMA International recently joined the Environmental Protection Agency (EPA) to challenge building managers to reduce their energy consumption by 10 percent in conjunction with the agency’s ENERGY STAR® program. The popular BOMA Energy Efficiency Program (BEEP) provides groundbreaking, educational seminars designed to help building managers reduce energy consumption and cut costs.
BOMA International and its partners in the Commercial Building Tax Deduction Coalition are now working to pass legislation in Congress to extend the program beyond its December 31, 2007 expiration date.
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