In 2005, President Bush signed the Energy Policy Act (EPACT), which provided for Federal tax incentives for businesses that enact energy efficiency and savings projects in commercial buildings. This law has been renewed several times, the latest in 2015, extending the tax benefits through year-end 2016. In general, commercial building owners and tenants who purchase and install products in their buildings that save energy may qualify for tax deductions up to a maximum of $1.80 per square of the affected space.
The deduction may be taken only for energy savings projects or upgrades that impact the following building systems:
- Lighting system
- HVAC system including hot water systems
- Building envelope
The building must achieve a 50% reduction in annual energy costs as compared to a base building defined by ASHRAE Standard 90.1-2007, for projects involving all three eligible systems. For projects that involve only one or two of the eligible systems, reduced percentage reductions are established by IRS guidelines in order to be eligible for a pro-rated tax deduction of $.60 per square foot per system. Additions to existing buildings or alterations to existing buildings qualify, with the tax deduction rate applied to the new or retrofitted square footage areas of the building.
There are many types of projects that might qualify for the tax deduction including:
- Continuous insulated roofing upgrades
- Lighting retrofits
- Motion sensors
- HVAC economizers
- Exhaust energy recovery systems
Once the project is complete, the building owner or tenant must demonstrate that the project or upgrade has met the established energy savings by way of a third party inspection. The IRS sets forth the criteria for inspectors as well as the process and reporting forms required. In addition, the inspector must use Department of Energy (DOE) certified software in order to calculate energy use rates. The owner or tenant claiming the deduction must maintain the inspection report.
Speer Mechanical helps building owners design, build, and upgrade systems to help make their buildings more efficient to earn tax credits. Contact us at 614.261.6331 to learn the many ways we can help, or visit our Energy Services page.
Click IRS Notice 2012-26 for additional guidance on the deduction for energy efficient commercial buildings.
Or, click here to view the National Renewable Energy Laboratory’s Energy Savings Modeling and Inspection Guidelines for Commercial Building Federal Tax Deductions Technical Report.
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House Bill 264 — A 30 Year Update on Energy Conservation in K–12 Schools
Ohio House Bill 264 was enacted in 1985 to allow school districts in Ohio to make energy efficiency improvements to their buildings and use the cost savings to pay for those improvements. Generally speaking, the cost of the energy conservation improvements must pay for themselves out of the energy savings within 15 years.
The law also allows school districts to issue notes, subject to some restrictions, without regard to the requirements of Chapter 133 of the Ohio Revised Code related to public debt. The debt incurred under HB 264 is not included in the net indebtedness calculation of the school district.
Since its inception, school districts across the state have utilized the benefits of this law to perform and fund energy conservation projects. These projects have saved and continue to save districts money in utility bills and operating costs. Although not exclusive, eligible projects include:
Over the past several years, various changes and modifications have been made to the process and rules for HB 264 projects. These have somewhat coincided with the oversight of these projects granted to the Ohio Facilities Construction Commission (OFCC). Major modifications have included:
The OFCC has information on these requirements on their website, along with sample templates for your use.
Visit OFCC Website
Speer Mechanical helps K–12 school districts understand and realize the necessary energy efficiency requirements to reap the benefits of Ohio House Bill 264. Visit our Energy Services page, or contact us at 614.261.6331 to learn the many ways we can help your district improve operating efficiency and save energy costs.
Service Matters: How to Avoid R-22 Pitfalls
In 2009, the Environmental Protection Agency (EPA) enacted rules to enforce a phased elimination of hydrochlorofluorocarbon refrigerants (R-22) through 2020. Since that time the EPA has passed additional rules that have accelerated the phase-out by further reducing the allowed production of R-22 from the original 2009 production levels by up to 47%. These reductions may result in a significant shortfall between R-22 demand and available supply.
Service Matters: HVAC Maintenance Tips for Severe Weather
Condenser coils are the most delicate components on air-cooled HVAC systems and one of the components most exposed to the elements. Severe weather, pollen, dust, dirt and debris can negatively impact your HVAC system and result in higher energy consumption and lower heating or cooling efficiency for your building.
Tax Deductions for Energy Efficiency Upgrades
In 2005, President Bush signed the Energy Policy Act (EPACT), which provided for Federal tax incentives for businesses that enact energy efficiency and savings projects in commercial buildings. This law has been renewed several times, the latest in 2015, extending the tax benefits through year-end 2016. In general, commercial building owners and tenants who purchase and install products in their buildings that save energy may qualify for tax deductions up to a maximum of $1.80 per square of the affected space.
The deduction may be taken only for energy savings projects or upgrades that impact the following building systems:
The building must achieve a 50% reduction in annual energy costs as compared to a base building defined by ASHRAE Standard 90.1-2007, for projects involving all three eligible systems. For projects that involve only one or two of the eligible systems, reduced percentage reductions are established by IRS guidelines in order to be eligible for a pro-rated tax deduction of $.60 per square foot per system. Additions to existing buildings or alterations to existing buildings qualify, with the tax deduction rate applied to the new or retrofitted square footage areas of the building.
There are many types of projects that might qualify for the tax deduction including:
Once the project is complete, the building owner or tenant must demonstrate that the project or upgrade has met the established energy savings by way of a third party inspection. The IRS sets forth the criteria for inspectors as well as the process and reporting forms required. In addition, the inspector must use Department of Energy (DOE) certified software in order to calculate energy use rates. The owner or tenant claiming the deduction must maintain the inspection report.
Speer Mechanical helps building owners design, build, and upgrade systems to help make their buildings more efficient to earn tax credits. Contact us at 614.261.6331 to learn the many ways we can help, or visit our Energy Services page.
Click IRS Notice 2012-26 for additional guidance on the deduction for energy efficient commercial buildings.
Or, click here to view the National Renewable Energy Laboratory’s Energy Savings Modeling and Inspection Guidelines for Commercial Building Federal Tax Deductions Technical Report.
Service Matters: Maximize Your Building’s HVAC System Efficiency With Routine Belt Maintenance
One of the least expensive components of your HVAC system, fan-motor belts, regularly cause significant, added operating expense to your building-operation cost.