homee-mailPrint
Commercial Lighting Tax Deduction
  • Be cautious michael kors purse about the mk watches anchors you place on stocks and shows mk handbags .
  • relogio michael kors is greater identified as michael kors crossbody has been a person of the extra michael kors mens watches profitable entrants in the trend planet.
  • A whole lot much more stunning bolsa michael kors excellent concepts cost mrelojes michael kors numerous quantity cellular quantities and bolsas michael kors.
  • 2014moncler
  • about us
  • email
  • Guide to the Energy Efficient Commercial Buildings Deduction


    Appendices

    EPAct 2005 (Public Law 105-58)

    Section 1331: Energy Efficient Commercial Buildings Tax Deduction

    Internal Revenue Service Notice 2012-26, April 23, 2012

    Internal Revenue Service Notice 2008-40, April 7, 2008

    Internal Revenue Service Notice 2006-52, June 26, 2006

    NEMA comments on IRB

    Guidance on Energy Policy Act Commercial Building’s Tax Deduction Certification Letters

    EfficientBuildings.org



    Introduction

    According to the U.S. Department of Energy, lighting represents 40% of the average commercial building’s electric bill. Responding to demand for more-efficient solutions, the lighting industry developed a wide range of energy-efficient products that can significantly reduce lighting energy costs while maintaining or potentially improving lighting quality. In new construction, energy-efficient lighting is the norm due to tightening energy codes. In existing buildings, older, obsolete systems are being upgraded as availability of older systems is eliminated by product regulations. The Energy Efficient Commercial Buildings Tax Deduction was created to enhance the financial attractiveness of investing in the most energy-efficient lighting and other building technologies.


    - top -

     

    THE ENERGY EFFICIENT COMMERCIAL BUILDINGS TAX DEDUCTION

    The Energy Efficient Commercial Buildings Tax Deduction (CBTD) is a special financial incentive created by the Energy Policy Act of 2005 and designed to reduce the initial cost of investing in energy-efficient lighting and other building systems via an accelerated tax deduction.


    This special tax deduction allows building owners (or tenants) to write off the complete cost of upgrading a building’s indoor lighting, HVAC/hot water and building envelope in the year the new equipment is placed in service, capped at $1.80/sq.ft. Alternately, the owner (or tenant) could upgrade one of these three systems to earn the CBTD capped at $0.60/sq.ft. In short, with the CBTD, the cost of new lighting or other building systems can be claimed in a single tax year instead of amortized over a period of years.


    The CBTD expiration date has been extended twice, most recently by the Energy Independence Act of 2007 (EISA). With this extension, the CBTD can be claimed for qualifying projects completed before January 1, 2014.

     

    - top -

     

    COMMERCIAL BUILDINGS TAX DEDUCTION (ALL SYSTEMS)

    For projects completed before January 1, 2014, a CBTD can be claimed that covers up to the entire deductible cost of investing in the installation of energy-efficient commercial building property, capped at $1.80/sq.ft.:

       
    Indoor lighting systems AND   HVAC/hot water systems AND   Building envelope features

    To qualify, EPAct 2005 and IRS Notice 2006-52 state:

    • the project must be certified to reduce total annual energy and power costs to at least 50% less than a Reference Building satisfying the requirements of ASHRAE/IESNA 90.1-2001 solely through changes to the building’s interior lighting, HVAC/hot water and building envelope;
    • the cost must otherwise be depreciable for tax purposes;
    • the project must be part of a new construction or renovation project within the scope of ASHRAE/IESNA 90.1-2001 (including addenda 90.1a-2003—transformers, 90.1b-2002—building envelope, 90.1c-2002—ducts, 90.1-d-2002—slab-on-grade floor insulation, and 90.1k-2002—piping insulation, as in effect as of April 2, 2003); and
    • the project must be located in the United States or its territories.

    - top -

     

    COMMERCIAL BUILDINGS TAX DEDUCTION (PARTIAL SYSTEMS)

    For projects completed before January 1, 2014, a CBTD can be claimed that covers up to the entire deductible cost of investing in the installation of energy-efficient commercial building property, capped at $0.60/sq.ft.:

       
    Indoor lighting systems OR   HVAC/hot water systems OR   Building envelope features

    To qualify, the project must be certified to reduce total annual energy and power costs to at least 10-25% less than a Reference Building satisfying the requirements of ASHRAE/IESNA 90.1-2001. These savings must be achieved solely through changes to one of the three qualifying building systems or features.

    The below target energy and power cost savings percentages, permitted under IRS Notice 2006-52, apply to projects completed between January 1, 2006 and December 31, 2008:

    Indoor lighting systems
    16-2/3%
    HVAC/hot water systems
    16-2/3%
    Building envelope features
    16-2/3%

    The below savings percentages, permitted under IRS Notice 2008-40, apply to projects completed between January 1, 2006 and December 31, 2013:

    Indoor lighting systems
    20%
    HVAC/hot water systems
    20%
    Building envelope features
    10%

    IRS Notice 2012-26 created alternate savings percentages, applicable as an additional savings option for projects completed between April 23, 2012 and December 31, 2013:

    Indoor lighting systems
    25%
    HVAC/hot water systems
    15%
    Building envelope features
    10%

    Tax deductions may be claimed for all three building systems ($0.60/sq.ft. for each) if they are verified to achieve the necessary energy and power cost reductions. However, the maximum allowable deduction cannot exceed $1.80 x the square footage of the building, minus any CBTD deductions claimed in prior years. The same limitation applies to multiple taxpayers that install energy-efficient property in the same building.

    In addition:

    • the cost must otherwise be depreciable for tax purposes;
    • the project must be part of a new construction or renovation project within the scope of ASHRAE/IESNA 90.1-2001 (including addenda 90.1a-2003, 90.1b-2002, 90.1c-2002, 90.1d-2002 and 90.1k-2002 in effect as of April 2, 2003); and
    • the project must be located in the United States or its territories.

    - top -

     

    COMMERCIAL BUILDINGS TAX DEDUCTION (“INTERIM LIGHTING RULE?

    For projects completed before January 1, 2014, a CBTD can be claimed that covers up to the entire deductible cost of investing in the installation of energy-efficient commercial building property:


    Indoor lighting systems

    The total amount that can be deducted is capped at between $0.30 and $0.60/sq.ft on the below sliding scale based on a 25-40% reduction below the maximum allowable lighting power density (W/sq/ft.) in ASHRAE/IESNA 90.1-2001:


    % of LPD reduction beyond Standard 90.1-2001 25% 26% 27% 28% 29% 30% 31% 32% 33% 34% 35% 36% 37% 38% 39% 40% >40%
    Amount of Eligible Tax Deduction/ sq.ft. $0.30 $0.32 $0.34 $0.36 $0.38 $0.40 $0.42 $0.44 $0.46 $0.48 $0.50 $0.52 $0.54 $0.56 $0.58 $0.60 $0.60

    Unless the space is a warehouse, in which case the indoor lighting must achieve a 50% reduction in lighting power density to achieve a maximum deduction of $0.60/sq.ft.


    To qualify, EPAct 2005 and IRS Notice 2006-52 state:

    • the project must be certified to reduce lighting power density by 25-40% less (50% if a warehouse) than the maximum allowable levels in ASHRAE/IESNA 90.1-2001’s Table 9.3.1.1 (Building Area Method) or Table 9.3.1.2 (Space by Space Method) (not including additional lighting power allowances);
    • the project must be part of a new construction or renovation project within the scope of ASHRAE/IESNA 90.1-2001?strong>including retrofits;
    • the cost must otherwise be depreciable for tax purposes; and
    • the project must be located in the United States or its territories.

    And:


    • any new control devices installed as direct replacements of existing control devices must comply with the space control requirements in ASHRAE/IESNA 90.1 sections 9.2.1.2(a) and 9.2.1.2(c); an exception is made for alterations that replace less than 50% of the light fixtures in a space, which need not comply provided that the alterations do not increase the installed interior lighting power (be sure to carefully read the “lighting alterations?provisions in Section 4.1.2.2.5 as well as all of Section 9 of 90.1);
    • bi-level switching must be installed in all occupancies except hotel and motel guest rooms, store rooms, restrooms, public lobbies and garages (garages were added by IRS Notice 2008-40); and
    • the project must achieve minimum recommended calculated light levels as established in the Tenth Edition of the IES Lighting Handbook.

    Bi-level Switching Explained

    EPAct 2005 does not define bi-level switching. NEMA defines it as manual or automatic control (or a combination thereof) that provides at least two levels of illumination and power in the space besides OFF, which can include the addition of controllable task lighting. The International Energy Conservation Code (IECC) defines it as a manual control allowing occupants to reduce connected lighting load in a “reasonably uniform illumination pattern by at least 50%.?Recognized methods include 1) controlling all lamps and fixtures (e.g., continuous or step dimming), 2) dual switching alternate rows, fixtures or lamps, 3) switching middle lamp independent of outer lamps in 3-lamp fixtures, providing three levels of lighting power, and 4) switching each fixture or each lamp. Be sure to check the appropriate local and state energy code, which may define what is accepted as bi-level switching.


    When 90.1 Controls Are Required

    In a new construction or renovation project within the scope of ASHRAE/IESNA 90.1-2001, the Standard’s mandatory controls and circuiting requirements must be met (or local code if more stringent), such as automatic shutoff (new construction), space controls and tandem wiring. In a retrofit project, these requirements only apply if 90.1 would normally be applicable to the project. The Standard basically says if an existing lighting system is altered and this alteration involves replacement of 1) 50% or more of the existing light fixtures and 2) existing lighting controls, then 90.1’s mandatory space controls requirements apply to the new lighting.

     

    - top -

     

    BUILDING TYPES COVERED


    CBTD projects must be within the scope of ASHRAE/IESNA 90.1-2001, which in turn applies to any building that is:

    • wholly or partially enclosed within exterior walls (or within exterior and party walls) and a roof, providing shelter to people, animals or property; or
    • is an unconditioned attached or detached garage space as referenced by Tables 9.3.1.1 and 9.3.1.2 of Standard 90.1-2001; and
    • is not a single-family house, multifamily structures three stories or fewer above grade, or a manufactured house (mobile or modular home).

    These buildings may include, but are not limited to, automotive facilities, convention centers, court houses, bars, cafeterias, fast food restaurants, family restaurants, dormitories, exercise centers, gyms, hospitals and other healthcare facilities, hotels and motels, libraries, manufacturing facilities and warehouses, workshops, motion picture theaters, multifamily buildings, museums, offices, parking garages, penitentiaries, performing arts theaters, police/fire stations, post offices, retail establishments, schools and universities, sports arenas, town halls and transportation facilities.

    IRS Notice 2008-40 adds unconditioned attached or detached garage spaces to the list of space types qualifying for the CBTD under the Interim Lighting Rule, as long as it has walls and a roof and is not a single-family house, multifamily building with three or fewer stories above grade, or a manufactured house (mobile or modular home).

    Note that while religious buildings are within the scope of 90.1, they do not qualify for the CBTD because religious organizations are tax-exempt and their buildings are not owned by the public.


    Portions of a Building

    It is possible to upgrade only portions of a building to higher-efficient lighting, with the CBTD based solely on the square footage of the upgrade space. Meanwhile, if a building contains dedicated spaces that are classified differently under ASHRAE/IESNA 90.1-2001—such as a manufacturing facility attached to a warehouse—these spaces must be treated separately, per ASHRAE/IESNA 90.1-2001.

     

    - top -

     

    WHO GETS THE CBTD

    If the building is a privately owned building?

    If the building is a publicly owned building?/strong>

    • Owner of the asset for tax purposes can claim the CBTD
    • Typically the building owner, but may be the tenant(s) if a lease building and the tenant(s) pay for the upgrade; in this case, they would have to agree on who the owner is for tax purposes beforehand
    • If two or more taxpayers install energy-efficient property on or in the same building, the applicable total CBTD must be shared among the taxpayers
    • Person who creates the technical specifications for installation of the energy-efficient property can claim the CBTD, according to IRS Notice 2008-40
    • If more than one designer is involved, the CBTD may be allocated by “owner?to designer primarily responsible for the design or among the designers
    • In some projects involving ESCOs, the ESCO is the owner for tax purposes

    Deducting What’s Left Over

    What if a project costs X but the CBTD only covers a portion of X? In this event, the remainder is deducted normally. So if a retrofit project in a 100,000-sq.ft. commercial office building costs $100,000 and the cost is $0.60/sq.ft., then $60,000 could be the gross deduction in the tax year the new lighting is placed in service, while the remaining $40,000 would be deducted normally—capitalized and amortized over time.

     

    - top -

     

    PROJECT CERTIFICATION: ALL OR PARTIAL SYSTEMS

    The process of certification of projects applying for the complete or partial-system CBTD is outlined in IRS Notice 2006-52.

    To qualify for the CBTD, the project must be certified that it will reduce the building’s total energy and power costs by a certain amount compared to a Reference Building. Only reductions caused by upgrading interior lighting, HVAC/hot water and building envelope can contribute to the CBTD; reductions in other energy uses, such as process loads, refrigeration and exterior lighting, do not count.

    A Reference Building is a building located in the same climate zone and otherwise comparable to the taxpayer’s building except its interior lighting, HVAC/hot water and building envelope meet the minimum requirements of ASHRAE/IESNA 90.1-2001.

    The energy performance of the Reference Building is determined using the Performance Rating Method in Appendix G of ASHRAE/IESNA 90.1-2004 as well as additional requirements from the 2005 California Title 24 Nonresidential Alternative Calculation Method Approval Manual. These procedures have been automated in several software programs recognized by the Department of Energy as being acceptable for CBTD projects. This analysis can be performed by any professional(s) that the owner would like to have perform it.

    Once the energy analysis demonstrates the necessary reduction in energy and power costs, the project must be certified by an engineer or contractor who 1) is properly licensed in the jurisdiction where the building is located, 2) doesn’t work for the taxpayer, and 3) has notified the taxpayer that he or she has the requisite qualifications to certify the project.

    According to IRS Notice 2006-52, the certification must contain contact information for the certifier, address for the taxpayer’s building, and a statement that:

    • the upgraded (or to be upgraded) building systems and/or features will reduce the building’s total annual energy and power costs by the required percentage compared to a Reference Building that meets the minimum requirements of ASHRAE/IESNA 90.1-2001;
    • the amount of the reduction was determined under the rules of IRS Notice 2006-52;
    • field inspections of the building performed by the certifier have confirmed that the building has met or will met its energy-saving targets, and that these inspections were performed in accordance with those procedures contained in the National Renewable Energy Laboratory’s Energy Savings Modeling and Inspection Guidelines for Commercial Building Federal Tax Deduction that are in effect at the time of the certification;
    • the building owner has received an explanation of the building’s energy efficiency features and projected annual energy costs;
    • qualified computer software was used to perform the required calculations;
    • presents a list identifying the components of the interior lighting, HVAC/hot water and building envelope features installed on or in the building, those features that are energy-efficient, and their projected annual energy costs; and
    • a declaration that the contents of the certification are “true, correct and complete.?/li>

    NEMA has published a series of boilerplate certification letters here.

    While the taxpayer does not need to attach the certification to their tax return, they must by law keep sufficient records to demonstrate they are entitled to the CBTD and in the designated amount.

     

    - top -

     

    PROJECT CERTIFICATION: INTERIM LIGHTING RULE

    The process of certification of projects applying for the CBTD under the Interim Lighting Rule is outlined in IRS Notice 2008-40.

    To qualify for the CBTD, the project must be certified to reduce interior lighting power density by 25-40% below the maximum allowances published in ASHRAE/IESNA 90.1-2001, while meeting other requirements related to controls and light levels.

    Note that although IRS Notice 2006-52 says qualified computer software must be used to calculate energy and power consumption and costs, this is not needed to demonstrate compliance with the Interim Lighting Rule. Instead, a spreadsheet or similar software can be used to simply compare lighting power density for the Proposed Building versus ASHRAE/IESNA 90.1-2001. This analysis can be performed by any professional(s) that the owner would like to have perform it.

    Once a suitable reduction in lighting power density is demonstrated, the project must be certified by an engineer or contractor who 1) is properly licensed in the jurisdiction where the building is located, 2) doesn’t work for the taxpayer, and 3) has notified the taxpayer that he or she has the requisite qualifications to certify the project.

    According to IRS Notice 2008-40, the certification must contain contact information for the certifier, address for the taxpayer’s building, and a statement that:


    • interior lighting systems have been, or are planned to be, incorporated into the building that meet all of the requirements of the Interim Lighting Rule (suitable reduction in lighting power
    • field inspections were performed by a qualified individual after the lighting was placed in service in accordance with testing procedures prescribed in the National Renewable Energy Laboratory’s Energy Savings Modeling and Inspection Guidelines for Commercial Building Federal Tax Deduction (see pages 1-2) and in effect at the time of the certification;
    • the inspections confirmed the building is meeting the specified reduction in lighting power density.
    • the building owner has received an explanation of the energy efficiency features of the building and projected power density;
    • presents a list of energy-efficient lighting components and features of the building, along with projected power density; and
    • a declaration that the contents of the certification are “true, correct and complete.?/li>

    NEMA has published a series of boilerplate certification letters here.

    While the taxpayer does not need to attach the certification to their tax return, they must by law keep sufficient records to demonstrate they are entitled to the CBTD and in the designated amount.

     

    - top -

     

    Contact Us | Partners | EfficientBuildings.org | Disclaimer
    ?012 NEMA | All Rights Reserved | About NEMA