Overview of EPact 179D tax deduction

179D Tax deductionWorldwide concerns over the depleting energy resources of the world has forced governments around the globe to not only take steps for energy consumption reduction, but also to recognize and reward individuals and establishments contributing to this universal crisis in whatever manner possible. Apart from bringing favorable changes in Research and development tax incentive, the government has also brought in a new act known as the Environmental Protection Act (Epact) and several tax deductions under it, one of which is the 179D tax deduction. It is an extension of the Energy Efficient Commercial Buildings Deduction through December 31, 2013. As a result of this legislation, those individuals and companies investing time and resources in implements that cut down on energy consumption get a tax deduction of up to $1.80/sf used in service after the 1st of Jan, 2006.

You must be wondering what the “sf” stands for above. Well, one of the unique features of this deduction is that it takes into account the amount of square foot that stands to gain, and not the amount spent, from the implements. An applicant who has at least 50,000 sq. ft. of area benefitting from the measures might prove to be an ideal candidate to avail this benefit.

A wide range of measures, ranging from choosing power-saver lights to full blown energy conservation projects, are included in the scope of Epact 179D Tax deduction. Commercial designers and architects that adopt or promote methods for energy conservation are also eligible for this saving, provided their design meets the evaluation criteria.

EPact 179D Tax deduction

The evaluation itself is carried out by a team of engineers and analysts including tax experts. In order to seek IRS approval, a third party verification of the tax benefit claims and accuracy of the measures listed is necessary. It is a good option to hire professionals that can carry out a preliminary check of the measures and suggest new methods after carrying out a cost-savings analysis of future energy conservation plans to be carried out so that the EPact 179 D tax deduction could be availed in the foreseeable future.

There are many ways to avail an energy conservation deduction all of which has to comply with the ASHRAE Standard 90.1-2001 and certification by a qualified expert.

This kind of tax deduction is much popular with establishments having multiple franchises or parts spread throughout the country as the amounts spent on different set-ups can be calculated together and the tax deduction on it becomes significant.

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