Commercial Property Owners Qualify for Energy Efficiency Deduction
June 2nd, 2006
WASHINGTON — The Internal Revenue Service today issued an advance copy of a notice
on how commercial building owners or leaseholders can qualify for the tax deduction
for making their building energy efficient. The notice establishes a process to
certify the required energy savings in order to claim the deduction.
The commercial building deduction, which was enacted in the Energy Policy Act of
2005, allows taxpayers to deduct the cost of energy-efficient property installed
in commercial buildings.
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 target. The notice provides
that buildings below the 50-percent threshold may, nevertheless, qualify for a deduction
of up to 60 cents per square foot of building floor area if they meet a 16⅔-percent
energy savings target.
Before claiming the deduction, the taxpayer must obtain a certification that the
required energy savings will be achieved. Today’s notice prescribes the content
of that certification and the qualifications that must be met by the person providing
the certification.
The notice also announces that the Department of Energy will create and maintain
a public list of software that must be used to calculate energy savings for purposes
of providing the certification. It also provides a process that software developers
must use if they desire to have their software included on that list.
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