Energy Efficient Commercial Building Tax DeductionGreen leaves
EPAct #179D - Lighting Upgrades

As part of the Energy Policy Act of 2005, the Commercial Building Deduction encourages companies to “Go Green” to not only save money on their utilities, but on their tax returns as well.

What RTG Lighting Inc. Delivers:

  • Perform assessment(s) to pre-qualify the property
  • Certify the energy efficiencies, which requires:
  • Review of construction documents
  • Site visits
  • Discussions with building designers, project managers, and related personnel
  • Calculate the amount of the deduction
  • Coordinate with your tax preparer to claim the deduction
  • Amend tax returns or make a method of change in accounting, (if necessary)

Claiming the Deduction

  • The deduction is available to both new construction and remodeling of commercial buildings performed between 2006 through 2013

  • The building must meet energy and power costs reduction standards as detailed in Standard 90.1 – 2001, Energy Standard for Buildings Except Low-Rise Residential Buildings (effective April 2, 2003)

  • Certification must be obtained to verify that the property installed satisfies specific energy efficiency requirements

  • The certification is performed by an independent qualified firm using IRS-approved modeling software

How it Works

Commercial building owners can take a deduction of up to $.60 per square foot of the building’s floor area if they install energy efficient lighting that reduces energy and power costs. Generally, these installations need to be a part of the building’s interior or within the covered sections of a parking garage.

The deduction is allowed for both new construction, and remodeling/re-lamping projects between 2006 through 2013. Recent legislation allows taxpayers to either amend prior returns or take the deduction in the current tax year.

To achieve the maximum $0.60 deduction, energy and power costs must be reduced by at least 40 percent when compared to a reference building (special rules apply for warehouses). If the reductions are less than 40 percent but over 25 percent, the building may still qualify for a deduction on a graduated scale of between $.30 and $.60 per square foot.