Tax Incentives for Energy Efficiency Upgrades in Commercial Buildings

Tax Incentives for Energy Efficiency Upgrades in Commercial Buildings

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There are certain energy efficient upgrades your business can make to gain tax incentives for 2020. These enhancements not only provide savings come tax time, but they also help your facility reduce energy consumption and save on operating costs.

Estes Commercial reviews the tax incentives your business may earn when you make efficiency-improving upgrades this year. Take action and improve savings with your commercial HVAC system. Contact us today for a consultation regarding energy efficient projects.

179D Commercial Buildings Energy Efficiency Tax Deduction

As over 20 percent of U.S. energy consumption is made by commercial buildings, tax credits are available to building owners who invest in energy efficient improvements that drastically cut energy use.

The 179D commercial buildings energy efficiency tax deduction is available to building owners who install qualifying systems, placed in service by December 31, 2020. The deduction may also be available to building tenants if construction expenditures were made. 

179D offers a tax deduction of $1.80 per square foot for owners of new or existing commercial buildings who install new heating, cooling or ventilation systems that reduce total energy and power expenses by 50 percent or more, compared to buildings meeting minimum requirements outlined by ASHRAE Standard 90.1-2007. Other building energy efficiency enhancements also qualify for this tax credit, such as interior lighting systems, building envelope improvements and hot water systems. This is a first-year deduction which allows building owners to avoid the 39-year depreciation period and use the maximum tax benefit upfront.

If systems only partially qualify by meeting target levels, a tax benefit up to 60 cents per square foot is available to building owners. This tax deduction is set to expire at the end of 2020, so take advantage by making energy efficient upgrades to your commercial heating and cooling system this year!

To Qualify for the 179D Tax Deduction

If you wish to claim the 179D tax write-off, you are required to present a certification report. The report must offer energy use modeling results performed through a Department of Energy-approved software. The model has to demonstrate a reduction in energy use versus the reference building of the applicable ASHRAE standard. The certification report also requires a physical inspection of the improvements by a licensed contractor or engineer.

You may also be able to claim the 179D tax benefit for qualifying energy efficient enhancements placed into service January 1, 2006 through December 31, 2020. No amended tax return is required – the depreciation schedule is adjusted and caught up to be taken in the current year.

Energy Investment Tax Credit for Geothermal Heat Pumps

A new 10 percent investment tax credit has been introduced for commercial buildings that make high-efficiency upgrades to install qualifying geothermal heat pumps in 2020. There is no upper limit, and systems must be purchased and placed into service by December 31, 2020 to qualify.

Make Energy Efficient Upgrades with Estes Commercial

Estes Commercial helps Atlanta business owners maximize energy savings to lower their bottom line and take advantage of great tax incentives to further savings. Always check with your tax professional to verify your project qualifies before undertaking this investment. To receive an estimate for the energy efficient upgrades you wish to make in your facility, contact us today.