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Tax Deductions for Commercial Buildings

Under the Energy Policy Act of 2005 (EPAct), you can take advantage of tax deductions of up to $1.80 per square foot for the certified use of qualifying energy-efficient technologies in both new construction or renovation applications.

These deductions reward the use of specific energy-efficient lighting and building envelope products that increase a building's energy efficiency by 25-40% compared to the ASHRAE 90.1-2001 standard. This benchmark was established in 2001 by the American Society of Heating, Refrigeration, and Air Conditioning Engineers to measure the watts per square foot used by various systems in commercial buildings. Because this standard was established before many newer, energy-efficient technologies became available, it can be relatively easy to qualify for EPAct 2005 tax deductions.

• Lighting, HVAC/hot water systems, and other building envelope products help a building qualify for this tax deduction.

• A one-time, whole building tax deduction of up to $1.80 per square foot is available for a lighting, HVAC/hot water, and building envelope upgrade

• A partial $0.60 tax deduction is available for an upgrade of any one system (lighting, HVAC, and building envelope products) that surpass the ASHRAE 90.1-2001 standard by 25-40%.

• These tax deductions are available for all property placed in service between January 1, 2006 and December 31, 2007.