Congress Votes to Extend Commercial Building Tax Deduction Through 2013

 

Effective October 3, 2008, both the Senate and House passed the Economic Stabilization Act that includes a provision to extend the Commercial Buildings Tax Deduction (CBTD). This deduction was scheduled to expire on December 31, 2008, and now is extended through December 31, 2013. There are no changes to the existing provisions to the CBTD. 

 

The Energy Policy Act of 2005 includes various tax incentives for energy efficient building systems, but did you know that energy efficient lighting can qualify for a tax deduction as much as $0.60/square foot? This is one of the most significant opportunities available to not only reduce energy and operating costs, but increase corporate cash flow. This incentive helps building owners reduce operating expenses and accelerate depreciation of their capital expenditures. Building owners will achieve the necessary requirements for virtually any type of building.

 

To qualify for the lighting tax deduction, a new building or lighting renovation must not exceed specific levels of power density, meet the IESNA light level requirements and incorporate controls.

 

For the power density, the lighting installation must be at a power density below the ASHRAE / IESNA Standard 90.1 – 2001 energy code. For most applications, the power density must be 25% - 40% below the code, with a sliding scale providing $0.30/sf to $0.60/sf depending on the power density level. While these power density levels sound aggressive, they are actually quite easy to achieve with the latest technologies in lighting, such as the Lithonia RT5™ and IBEAM® lighting systems. 

 

While many building owners are concerned about the complexity and cost of controls, the requirements are actually very simple. The lighting installation simply needs to include bi-level control capabilities, providing two or more levels of lighting within a space. In a warehouse, occupancy controls embedded in the fixture or installed on each aisle turn off only lights within that aisle without affecting the light in adjacent aisles and meet the requirement. For new construction, the lighting system must also meet the whole building and space controls prescribed in ASRHAE / IESNA 90.1 – 2001. The energy savings resulting from the use of controls will far outweigh your cost to purchase and install them, or even the benefits of the tax deduction; so make sure to focus on incorporating controls that maximize the building owners energy reductions.

 

IRS provided additional guidance in March 2008 describing details on how the designer of an energy efficient building system can claim the deduction for government buildings. So lighting designers, architects and energy service professionals who created the technical specifications for the lighting system can actually claim the deduction for the lighting equipment. The deduction for government buildings cannot be claimed by a person that merely installs, repairs, or maintains the property.

 

The Lithonia web site has a detailed brochure outlining the lighting tax deduction, a calculation tool to determine the amount of the deduction, energy savings and payback as well as sample certification forms for this deduction. For more information, visit www.lithonia.com/taxdeduction.

 

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Congress Votes to Extend Commercial Building Tax Deduction Through 2013

 

Effective October 3, 2008, both the Senate and House passed the Economic Stabilization Act that includes a provision to extend the Commercial Buildings Tax Deduction (CBTD). This deduction was scheduled to expire on December 31, 2008, and now is extended through December 31, 2013. There are no changes to the existing provisions to the CBTD. 

 

The Energy Policy Act of 2005 includes various tax incentives for energy efficient building systems, but did you know that energy efficient lighting can qualify for a tax deduction as much as $0.60/square foot? This is one of the most significant opportunities available to not only reduce energy and operating costs, but increase corporate cash flow. This incentive helps building owners reduce operating expenses and accelerate depreciation of their capital expenditures. Building owners will achieve the necessary requirements for virtually any type of building.

 

To qualify for the lighting tax deduction, a new building or lighting renovation must not exceed specific levels of power density, meet the IESNA light level requirements and incorporate controls.

 

For the power density, the lighting installation must be at a power density below the ASHRAE / IESNA Standard 90.1 – 2001 energy code. For most applications, the power density must be 25% - 40% below the code, with a sliding scale providing $0.30/sf to $0.60/sf depending on the power density level. While these power density levels sound aggressive, they are actually quite easy to achieve with the latest technologies in lighting, such as the Lithonia RT5™ and IBEAM® lighting systems. 

 

While many building owners are concerned about the complexity and cost of controls, the requirements are actually very simple. The lighting installation simply needs to include bi-level control capabilities, providing two or more levels of lighting within a space. In a warehouse, occupancy controls embedded in the fixture or installed on each aisle turn off only lights within that aisle without affecting the light in adjacent aisles and meet the requirement. For new construction, the lighting system must also meet the whole building and space controls prescribed in ASRHAE / IESNA 90.1 – 2001. The energy savings resulting from the use of controls will far outweigh your cost to purchase and install them, or even the benefits of the tax deduction; so make sure to focus on incorporating controls that maximize the building owners energy reductions.

 

IRS provided additional guidance in March 2008 describing details on how the designer of an energy efficient building system can claim the deduction for government buildings. So lighting designers, architects and energy service professionals who created the technical specifications for the lighting system can actually claim the deduction for the lighting equipment. The deduction for government buildings cannot be claimed by a person that merely installs, repairs, or maintains the property.

 

The Lithonia web site has a detailed brochure outlining the lighting tax deduction, a calculation tool to determine the amount of the deduction, energy savings and payback as well as sample certification forms for this deduction. For more information, visit www.lithonia.com/taxdeduction.

 

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