Tax Deductions for Energy Retrofits

I was recently reading the current issue of Development magazine…the official publication of NAIOP (National Association of Industrial and Office Properties…a building developer’s organization) and saw an article that reminded me that the energy retrofit incentives of the tax code still exist. The article cites the Commercial Building Tax Deduction (CBTD) that allows tax deductions for various energy saving retrofits in buildings.
This particular article focused on lighting retrofits and highlighted the $0.60 per square foot deduction that could be available. The tax code under Section 179d allows additional deductions and depreciation advantages that extend to the HVAC equipment as well in many cases. When all of the conditions are right it is possible to receive as much as $1.80 per square foot in deductions. Combined with local and utility rebates the end result is that many projects are essentially “free”. In our own facility in Dallas we took advantage of this program, and although the project was not “free” we did achieve an 18 month payback.
As with anything that involves the tax code you should consult with an accounting firm that understands and specializes in commercial real estate (Wipfli located in Wisconsin would be one example). You should also align yourself with a registered consulting engineer who has the ability to perform the energy analysis that is required to support your claim. But if you take those steps you could easily find a way to greatly reduce your operating expenses going forward. Mestek has a number of product solutions that can assist in this effort from our lighting distribution company (Axon Electric) to the Applied Air air turnover and Aztec evaporative cooling products produced in Dallas and the KN condensing boiler product line from our Hydrotherm brand.

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