Posts Tagged ‘legislation’

President Signs and Extends Renewable Energy Tax Incentives

Valuable energy tax benefits that were scheduled to expire this year have recently been extended through 2013.

(United States – November 4, 2008) Valuable energy tax benefits that were scheduled to expire this year have recently been extended through 2013. As a result, substantial opportunities continue to await commercial building owners, real estate investors, architects and contractors who understand and know how to take advantage of these tax benefits.

“Congress approved, and the President has now signed into law, a measure that will help keep energy efficient commercial building, emerging wind, solar and geothermal industries in business.  This is a major and the most significant legislation approved by Congress this year to help address the energy issues in the United States” stated Julio Gonzalez, CEO of Engineered Tax Services. “Engineered Tax Services has worked hard educating the American Public on the importance of these much-needed tax incentives that enable energy efficiency and renewable energy in the United States and I’m very proud that Engineered Tax Services has been at the forefront in promoting energy efficient tax programs” added Julio Gonzalez.

The extension of the energy provisions, based upon legislation introduced by Senators Snowe and Feinstein, provides an estimated $1.779 billion in incentives for energy-efficient buildings. Critical components of the extension include the following incentives:

1. Renews critical tax credits for energy-efficient upgrades for existing homes, such as air conditioning and insulation.
2. Extends a tax credit for energy efficient new homes up to $2,000.
3. Extends for five years a landmark energy efficient commercial building deduction.
4. Provides eight years of tax stability to the solar industry.
5. Extends the 30 percent investment tax credit for solar energy property and qualified fuel cell property until 2016.  This will provide long-term stability to the solar and fuel cell industries in California. With this in place, large-scale solar projects will move forward. Extends the credit for residential solar property for eight years through 2016, and removes the (currently $2,000) for solar electric investments.

The most often overlooked tax benefit relative to The Energy Policy Act extension is the tax benefits construed for the commercial building owners. Real estate investors can now reduce the payback period in investing in energy-efficient components with the added benefit of deducting up to the entire expense of these assets immediately versus depreciating these assets over 39 years. The Energy Policy Act of 2005 includes a tax deduction for investments in “energy-efficient commercial building property” designed to significantly reduce the heating, cooling, water heating, and interior lighting energy cost of new or existing commercial buildings. To be eligible, the energy-efficient commercial building property must be placed in service between January 1, 2006 and December 31st, 2013.

To qualify for the full deduction, a building owner or tenant must make investments designed to reduce energy costs by 50% or more. A partial deduction of $0.60 per square foot is available for investments in one of three systems-lighting; heating and cooling; or building envelope- designed to reduce energy costs by 16 and 2/3% (i.e., one-third of the 50% requirement).  These tax deductions reduce the real estate investors overall taxable income with the value of the deduction dependent on their tax bracket.

There are five alternative ways a building may qualify. Before a taxpayer may claim the section 179D deduction with respect to property installed on or in a commercial building, the taxpayer must obtain a certification with respect to the property by an independent licensed engineering firm. The certification must be provided by a qualified individual and satisfy the requirements of section 179D(c)(1). The five alternative ways to qualify a building are listed below:

1. The whole building may qualify for up to $1.80 per square foot; or
2. Lighting systems; or
3. HVAC/water heating; or
4. Building envelope may each qualify for up to a $0.60 per square foot deduction for their contribution to the 50 percent savings (defined by the Internal Revenue Service as 16 2/3% whole buildings savings); or
5. Lighting may receive an up to a $0.30 to $0.60 deduction for reductions in lighting power density from ASHRAE 90.1-2001 tabular values of 25 percent to 40 percent respectively, with linear interpolation between 25 and 40 percent.

An even more hidden gem within the Energy Policy Act is the fact that for energy-efficient commercial building property expenditures made by a public entity, such as public schools, Congress allows the deduction to be allocated to the “person primarily” responsible for designing the property in lieu of the public entity. Simply put, the 179D provision also benefits the contractors, architects or engineers who are the primary individuals responsible the energy efficiency design of public buildings.

These benefits made available by Congress were passed to encourage property owners to build energy efficient real estate properties and give them incentive to reduce energy consumption. As energy prices continue to escalate, the timing of the extension of the act could not be better for property owners and investors constructing new properties to take advantage of substantial tax benefits which will in turn promote a reduction in energy consumption and contribute to a more green community.

Engineered Tax Services is a licensed engineering firm and the premier firm in the United States at marrying the science of energy engineering with the principles of tax and accounting. ETS provides IRS sanctioned services to include engineered based Cost Segregation Studies, Energy Tax Credits, Research & Development Credits, Insurance Replacement Appraisals and Property Tax Appeals.

For more information regarding this press release, please feel free to contact Engineered Tax Services at 800-236-6519 or visit their website at www.engineeredtaxservices.com.