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Energy Standard Key to Deduction

July 31, 2006
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ATLANTA - Under requirements of the Building Energy Efficiency Standards Program, set by the Energy Conservation and Policy Act (ECPA) of 2005, businesses are eligible for tax deductions for improving the energy efficiency of commercial buildings. Specifically, tax deductions are allowed for energy-efficient commercial buildings that reduce annual energy and power consumption by 50 percent as compared to Standard 90.1-2001, Energy Standard for Buildings Except Low-Rise Residential Buildings.

The Internal Revenue Service (IRS) issued rules on how commercial building owners can qualify for deductions. The IRS states that "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 (relative to 90.1). The notice provides that buildings below the 50 percent threshold may qualify for a deduction of up to 60 cents per square foot of building floor area if they meet at least the 16 2/ 3  percent energy-savings target for any of three areas – lighting, HVAC and water heating, and building envelope.

"ASHRAE strives to help the Department of Energy implement the Building Energy Efficiency Standards Program," said Terry Townsend, P.E., American Society of Heating, Refrigerating and Air-Conditioning Engineers' president. "ASHRAE is proud of our role and responsibility to help engineers and their clients earn these tax credits from ECPA. We take that role very seriously."

Publication date: 07/31/2006

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