Archive for the ‘Energy Policy Act’ Category

According to the US Department of Energy, buildings consume around 37% of the energy almost 70% of the electricity produced in the United States. The Energy Policy Act of 2005 (EPAct) was enacted to help save energy by encouraging commercial building owners to incorporate energy efficient features in their buildings. The program was originally scheduled to expire at the end of 2009, but in 2008 EPAct was extended through December 31, 2013. For buildings placed in service between January 1, 2006 and December 31, 2013, the building owner is eligible for a federal tax deduction of up to $1.80 per square foot if certain energy efficiency criteria are met. EPAct has proven to be a great incentive for owners, resulting in significant energy savings and an increased awareness of energy efficient technologies. To fully implement the intent of the legislation, in the case of public buildings where no federal tax liability exists, the designer of the building is allowed to take the deduction upon obtaining a written allocation letter from the owner.  

The designer is the “person primarily responsible for the design” and may include 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. To qualify for the full $1.80 per square foot deduction, the building must achieve a 50% energy savings as compared to a similar building that would have met the minimum requirements of ASHRAE 90.1 – 2001. The energy savings must be achieved through: (1) the building envelope; (2) the interior lighting system; and (3) HVAC & Hot Water systems. Each system contributes $.60 per square foot to the total deduction and can qualify independently. Partial deductions of from $.30 to $.60 per square foot are also available for lighting under IRS interim rules.

Any building that falls under the guidance of ASHRAE 90.1 – 2001 is eligible and IRS Section 179D defines the specific procedures required to obtain the deduction. Basically, the building must be modeled – both in a “baseline” (2001) version and an then using actual components, using approved building simulation software to determine how many systems qualify for certification. An independent, qualified person must conduct a physical site visit to certify that the qualifying systems were installed in accordance with the modeled documents. The amount of the deduction, taken in the year the building is placed in service, is entered on the tax return of the person applying for the deduction. The IRS allows taxpayers to amend tax returns for up to three years, so it still possible to claim the deduction for a building placed in service in 2007 depending on when the ’07 tax return was filed. 
Nilo C. Regojo, AIA, LEED^® AP  
nregojo@engineeredtaxservices.com 
267.303.1142

For additional information please contact:

Nilo was born in Miami, Florida, and grew up visiting construction projects with his father, a civil engineer. This early influence directed him to a career in architecture. His love of older buildings led him to Philadelphia. He received his Bachelor of Design from the University of Florida and a Master of Architecture from the University of Pennsylvania.

Nilo’s experience includes working for various architectural firms in Miami and Philadelphia as well as a national developer of historic residential properties. He also ran his own practice for four years. Prior to joining A² Group to develop the firm’s in house architectural practice, Nilo was a principal at spg³ in Philadelphia. His projects draw upon his unique expertise which consists of innovative design tempered with real world experience. 

Nilo is a member of the USGBC, the Delaware Valley Green Building Council (DVGBC) and Green Roofs for Healthy Cities. As spg3′s first principal to become a LEED Accredited Professional, he also led the firm’s Sustainability Initiative.

In December 2009, Nilo became a Certified Building Commissioning Professional

Curious about where you can find an ETS event? Check out our company Facebook Events Calendar!  There are dozens of events coming up in the next few weeks, and more are scheduled every day. If you don’t see your city listed, check back again soon. We will likely be in your neck of the woods in the very near future.

Would you like to schedule us for an outstanding 179D Energy Tax seminar, webinar or conference? Please contact us. We are adding new events all the time and welcome requests.

For more information about our Green By Design: Understanding 179D Energy Tax Benefits for Architects and Designers series of seminars, or to schedule a speaking engagement, please contact Loryn Nash at 888.607.2425.

John Cummings - National Director of Business Development

How?  The first step is to “data mine” your tax software.  We have found on average when working with CPA firms that it takes about fifteen minutes for us to help generate a report that identifies a firm’s real estate clients that may have conducted energy upgrades to their buildings since 2006 in the fixed asset system.

The results have been nothing but astonishing.  On average, we have found five projects per partner with an average fee of $10,000 to generate the tax deductions that are available.  Once a CPA firm has generated a report from their tax software, we work with them to do a benefit analysis to see what the tax benefits will likely be for their clients. From there, the CPA firm simply contacts the clients with the good news about available tax savings.

The Energy Policy Act allows property owners up to $1.80 per square foot in tax benefits for energy efficient lighting, HVAC systems, roofs, windows or insulation installed in a building since January of 2006.  Property owners aren’t the only clients that benefit.  When the property in question is owned by a government entity, the tax benefits can be enjoyed by the designer of the building (architect, engineer, contractor or construction management firm) to reward them for the energy efficient design.  

Timing.  Fortunately, the IRS allows a taxpayer to go back three years to amend tax returns. That means there is still time to capture missed benefits even as far back as 2006, but the clock is ticking and soon 2006 opportunities will expire for good.   Five year net loss carry back rules enhance these benefits so the time is perfect to go through this exercise.

Examples:

Large Hotel in Florida – A certification of over a million square feet of new building placed in service in 2009 resulted in a tax deduction of $1.3 million for the taxpayer.

Architect in Washington – A portfolio of school properties from K through 12 yielded a tax deduction for the 2009 tax year of nearly $500,000.

The above examples are common.  In fact ETS performs several hundred studies every year and generates several million dollars in deductions every month.

The IRS requires that an independent licensed engineering firm certify the energy calculations. ETS serves as the professional engineering firm that is the resource to CPA firms nationwide. For virtually no cost and little investment of your time, ETS can likely identify many opportunities, leverage your client base for additional revenue in the 3rd and 4th quarter of this year and make your firm the area experts in this specialty tax service.

Engineered Tax Services (ETS) is the only qualified professional engineering firm that has its own licensed engineers, LEED Accredited Professionals, and experienced Certified Public Accountants on staff. We marry the science of engineering with the principles of tax and accounting to arrive at financial solutions that result in increased cash flow, minimized tax payments and maximum return on investment. These IRS-sanctioned services include Energy Tax Credits, Energy Policy Act Certifications, Cost Segregation Studies, Historic Tax Credits, Insurance Appraisals, Energy Audits and Renewable Energy Credit services. Our attention to detail is second to none. We meticulously follow IRS guidelines and go beyond the standards required. Our procedures, processes and final work product set the benchmarks that others strive to reach.