by Rebecca A. Olson
Under the Energy Tax Incentives Act of 2005, a taxpayer will be allowed a deduction for an amount equal to the cost of energy efficient commercial building property placed in service in 2006 or 2007.
The overall purpose of the deduction is to encourage energy-efficient renovation of older commercial buildings. The deduction is also allowed for qualifying improvements in the construction of new commercial property if the property is placed in service in 2006 or 2007.
The maximum amount that can be deducted is $1.80 per square foot of the building in question, less the total amount of deductions taken under this provision in prior years.
Energy-efficient commercial building property is property that meets all of the following requirements:
- Qualifying energy efficient property (“property”) for which depreciation is allowed or allowable.
- The property is installed in or on a building.
- The building for which the property is installed is located in the United States.
- The property must be within the scope of Standard 90.1-2001 of the American Society of Heating, Refrigerating, and Air Conditioning Engineers and the Illuminating Engineers of North America. Copies of Standard 90.1-2001 can be purchased from the American Society of Heating, Refrigerating, and Air Conditioning Engineers. The website address is http://www.ashrae.org.
