Various incentive programs exist to encourage the use of energy efficient equipment in lighting projects. These include tax incentives by various jurisdictions and rebates from states and utility companies.
The Commercial Buildings Tax Deduction in Section 179D expired December 31, 2014. However The Tax Extenders Act, HR 2029, was signed into law on December 18, 2015. The Tax Extenders Act reinstated Section 179D for qualified energy-efficient commercial buildings, but only until December 31, 2016. The energy baseline for projects installed in calendar year 2016 has been updated to ASHRAE 90.1-2007. Qualified projects installed prior to 1/1/2016 can apply for the deduction based on the ASHRAE 90.1-2001 energy standard.
A tax deduction of up to $1.80 per square foot is available to owners or designers of new or existing commercial buildings that save at least 50% of the heating and cooling energy of a building that meets ASHRAE Standard 90.1-2007. Partial deductions of up to $.60 per square foot can be taken for measures affecting any one of three building systems: the building envelope, lighting, or heating and cooling systems. These tax deductions are available for systems “placed in service” through December 31, 2016.
This deduction applies to new construction or renovations for property located within the United States.
The information contained on this site about The Energy Policy Act of 2005 is not offered as tax advice and should not be taken as such. Any information here or any other document referred to is meant for general informational purposes only. Please consult with your tax advisor to determine the specific tax treatment appropriate for your company.
Allocation of Deduction
The deduction may be allocated to design firms for commercial building property expenditures made by a public entity, such as public schools, hospitals or government offices.
A 'designer' is a person that creates the technical specifications for installation of energy efficient commercial building property. A designer may include, for example, an architect, engineer, contractor, environmental consultant or energy services provider who creates the technical specifications for a new building or an addition to an existing building that incorporates energy efficient commercial building property. A person that merely installs, repairs, or maintains the property is not a designer.
If more than one designer is responsible for creating the technical specifications for installation of energy efficient commercial building property on or in a government-owned building, the owner of the building shall:
1. determine which designer is primarily responsible and allocate the full deduction to that designer, or
2. at the owner’s discretion, allocate the deduction among several designers.
1. Design and install the compliant lighting system
2. Have a ‘qualified’ person certify the project
3. Claim deduction on tax form
4. Attach a copy of the compliance certificate to the file copy of the tax returns to be brought out if audited