Business & Insurance Litigation Newsletter for Indiana
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New Tax Deduction for Energy Efficient Commercial Buildings The Energy Act Code Sec. 179D, as added by Act §1331, creates a brand new tax deduction for expenses incurred for energy efficient commercial buildings. It is major incentive for building owners to upgrade their systems and for those building new structures to design them in an energy efficient manner. The deduction is available whether the building is new or used. The maximum energy efficient commercial building (EECB) deduction is equal to (1) $1.80 per building square foot ($.60 per building square foot, for certain building systems), less (2) the aggregate amount of EECB deductions allowed for the building for prior years. (Code Sec. 179D(b), Code Sec. 179D(d). For example, in 2006, BuilderCo, a developer of corporate office space and a calendar-year taxpayer, began construction of a new 100,000 square foot office building that uses new technology to reduce the building's use of energy in the lighting, heating, cooling, ventilation, and hot water supply systems. The building is to be completed and placed in service in March 2007. If the energy and power cost reduction requirements are met and BuilderCo has not taken deductions in any prior years, it can take a tax deduction of up to $180,000 ($1.80 x 100,000 sq. ft.) in 2007. |
