WASHINGTON - The Internal Revenue Service published an advance copy notice detailing how commercial building owners or leaseholders can qualify for a tax deduction for making their building energy efficient. Enacted in the Energy Policy Act of 2005, the deduction allows taxpayers to recoup some of the cost of energy-efficient property installed in commercial buildings. Buildings that achieve 50 percent energy savings may deduct as much as $1.80 per square foot of building floor area. Buildings below the 50 percent threshold qualify for a deduction of up to 60 cents per square foot of floor area if they meet a 162⁄3 percent energy savings target.
The notice establishes a process to certify the required energy savings in order to claim the deduction. The taxpayer must obtain a certification that the required energy savings will be achieved. The notice prescribes the content of that certification and the qualifications that must be met by the person providing the certification. It also announces that the Department of Energy will create and maintain a public list of software that must be used to calculate energy savings for purposes of providing the certification. It outlines a process that software developers must use if they desire to have their software included on that list.
For more information, visit www.irs.gov.
IRS Issues Procedure for Efficiency Deduction
August 1, 2006