2009 Tax Breaks for Energy-Efficient Commercial Buildings

Though it may not seem like it, there is help available for businesses that are trying to stay intact during this turbulent economic period.

While some of this assistance may come from bailouts and banks, there are other avenues also well worth researching. For example, a lesser-known corporate tax deduction for energy-efficient building materials and environmental controls for commercial buildings could offer property managers valuable financial breaks.

This potential windfall is largely a consequence of the Emergency Economic Stabilization Act (EESA), which former President George W. Bush enacted in October 2008. As part of the package, Bush extended the Energy Efficient Commercial Building Tax Deduction for another five years, that is until December 31, 2013.

The extension of the deduction gives property managers planning new buildings or retrofits plenty to consider since they cover improvements ranging from interior lighting to duct/air sealing and insulation among others. All equipment used must meet specific certification requirements in order to qualify for the deductions.

According to the Commercial Building Tax Deduction Coalition, a tax deduction per square foot is permitted for owners who install equipment that reduces the building’s total energy and power cost by 50 percent or more in comparison to a building meeting minimum requirements set by ASHRAE Standard 90.1-2001.

“Everyone is more mindful of energy consumption these days,” says Mike Kluber director of engineering firm Kluber Skahan + Associates, Inc. in Batavia, Ill and a Certified Energy Manager who is also LEED-certified. “When looking at maintenance plans for your new or replacement equipment, don’t just look at maintaining it but seek better performance.”

Kluber says the EESA tax deduction is a good way to help rationalize the use of energy-saving equipment, which could be a little more expensive than their ‘generic’ counterparts. While some of the deductions might seem complicated to claim, Kubler says more resources have been made available to assist in the effort.

In addition, if you are participating in other energy efficiency programs, such as LEED by the U.S. Green Building Council or the U.S. EPA’s Energy Star, you may already qualify for certain deductions for energy-saving materials and equipment.

To claim the tax deduction, Kluber says qualified individuals which, when considering state licensing laws means licensed engineers, are required to complete statements involving energy efficiency. Typically, requests are made by the building owner or property manager and passed on to the tax professional in order to prepare the tax return documentation. A few components include:

• The engineer’s qualifying statement, which demonstrates how the building complies with required standards
• Required field inspection to prove the use of energy-saving materials or equipment
• Statement of how calculations are performed for each type of equipment or material used. For most items, except lighting, specific software is required.

“Programs like the EESA tax deduction give plenty of reasons, opportunity and education to achieve energy savings. Plus, it’s good stewardship,” Kluber concludes.