June 9, 2006—The US Internal Revenue Service (IRS) recently issued an advance copy of a notice on how commercial building owners or leaseholders can qualify for a federal tax deduction by making their buildings more energy efficient.
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 cut their energy use by half. Buildings that fall below that target can still earn a deduction of 60 cents per square foot if they at least cut their energy use by one sixth.
Before claiming the deduction, the taxpayer must obtain a certification that the required energy savings will be achieved, and the notice describes how to obtain that certification.
To support this effort, DOE will create and maintain a public list of software that must be used to calculate energy savings for purposes of providing the certification. For more information, see the IRS notice.
