Ok, post before last, I wrote about whether or not the Energy Efficient Commercial Building Deductions were going to be extended past Dec 31, 2008. Luckily, we found out that they will be extended until 2013. The next question I have for myself is “how does the deduction actually work?” I did some research and here is what I came up with.
Section 179D provides a deduction equal to the monetary value of the approved energy-efficiency expenditures.
The expenditures that qualify must be installed as part of the interior lighting, HVAC, hot water, or the building envelope. Additionally, the property must be installed as part of an effort to reduce energy usage to 50% of a baseline building that meets the minimum requirements of Standard 90.1-2001.
How much can you receive as a deduction?
Well, you can get $1.80 per square foot of installed energy-efficiency equipment.
In the case that your building doesn’t meet the 50% reduction in energy, you can still get a partial deduction of $.60/sf for the installed energy-efficient system.
The IRS has two different Notices (which are different from Bulletins) 2008-40 and 2006-52. 2006-52 is an earlier version. 2008-40 is an “Amplification of Notice 2006-52″. These Notices have the text of the requirements and you read until you get dazed and confused like I did.
For Energy Analysis experts, this law matters even more because it limits the type of software that an analyst can use to determine the 50% energy savings. A list of qualified computer software can be found on the DOE’s website. Rumor has it that eQuest is a confirmed qualified software but I will only believe it when I see it on the website.
I think that this is as far as I want to take this subject right now. I’d love to hear from any readers about the subtle nuances that I know I am missing. Happy New Year all!
[...] somehow this gentleman named Stephen Del Percio sent me a message through twitter responding to my blog post on 179D. Well, he wrote a really great blog post about this which I wanted to serve up [...]