Tax Incentives for Businesses Going Green
With steady environmental degradation and global warming on the rise, it has become imperative for businesses, small and big, to own up to their responsibility and conduct business in a way that strengthens and not weakens the environment. The best part is green businesses will receive assistance from the Federal government in their effort, which has lined up attractive tax incentives for businesses going green.
Here we discuss the federal tax incentives available for rented or owned commercial buildings or systems functioning from or after January 1, 2006 to December 31, 2013. Green commercial buildings that save a minimum of 50% of their energy costs like heating, cooling, ventilation, and internal lighting can obtain a $1.8 per square foot tax deduction. This includes already existing, modified or new buildings that meet the ASHRAE 90.1-2001 standard
; even designers of public buildings are covered.
Tax incentives of $0.6 per square foot can also be availed by green businesses, in different proportions, for improving one of the three building energy systems. For instance, improvements in building envelope can fetch 10% deductions and for lighting, or heating and cooling systems, it is 20% each. Lighting systems that use dual switching and reduce lighting power by at least 25% from ASHRAE Standard 90.1-2001 table values can avail a $0.30 deduction per square foot. For lighting systems that save 25% to 40% power, the deductions increase proportionally up to $0.60 till 40% power reduction is reached. These deductions can be availed by the building owner, and even in specific cases, the tenant who invested in lighting efficiency improvements, while for public buildings the green building designer can avail these federal tax incentives.
Qualifying criteria for the green tax incentives
- Details of total area per square foot of the building
- Date when the building was placed in service
- Certification regarding savings targets met either 50% for 3 systems or 16 2/3% for individual system, from a licensed engineer or contractor who is not related or linked to the person or business availing themselves of the deductions. These certifications should adhere to procedures in Appendix G of ASHRAE Standard 90.1-2004 and calculations, if any, should be done on software approved by the US Department of Energy. The certifiers should have visited the buildings since their service initiation to ensure that they meet their savings targets. They should follow the inspection procedures and standards developed by the National Renewable Energy Laboratory and also provide a list of the building’s energy saving features along with its estimated annual energy costs.
The builder or designer, as the case may be, can avail themselves of the tax deductions from the year the property started functioning. So what are you waiting for? Go green and save some cash along the way.