If the owner does not want to pursue the complete tax deduction capped at $1.80/sq.ft., the owner can focus on just one of the three qualifying building systems—interior lighting, HVAC/hot water or building envelope.
Like the complete deduction, this level of deduction can be used to write off the complete cost of an individual system upgrade, but it is capped at a lower amount—$0.60/sq.ft.
EPAct 2005 instructed the Secretary of the Treasury to establish the savings targets for these individual systems.
IRS Notice 2006-52 established each system target as 16 2/3 % of the whole building annual energy cost reduction. Be sure to refer to the June 26, 2006 corrected version in Internal Revenue Bulletin 2006-26. |
‘‘(d) SPECIAL RULES.—
‘‘(1) PARTIAL ALLOWANCE.—
‘‘(A) IN GENERAL.—Except as provided in subsection (f), if—
‘‘(i) the requirement of subsection (c)(1)(D) is not
met, but
‘‘(ii) there is a certification in accordance with
paragraph (6) that any system referred to in subsection (c)(1)(C) satisfies the energy-savings targets established by the Secretary under subparagraph (B) with respect to such system, then the requirement of subsection (c)(1)(D) shall be treated as met with respect to such system, and the deduction under subsection (a) shall be allowed with respect to energy efficient commercial building property installed as part of such system and as part of a plan to meet such targets, except that subsection (b) shall be applied to such property by substituting ‘$.60’ for ‘$1.80’.
‘‘(B) REGULATIONS.—The Secretary, after consultation with the Secretary of Energy, shall establish a target for each system described in subsection (c)(1)(C) which, if such targets were met for all such systems, the building would meet the requirements of subsection (c)(1)(D).”systems, heating, cooling, ventilation, and hot water systems of the building by 50 percent or more in comparison to a reference building which meets the minimum requirements of Standard 90.1–2001 using methods of calculation under subsection (d)(2).”
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