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Building Envelope Tax Incentives

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Take advantage of Federal tax incentives for improving your building envelope and energy performance.

The Federal Energy Policy Act of 2005 provides energy saving tax incentives for homeowners, builders, and building owners. The incentives are due to expire at the end of 2007.


from Wikipeida - Energy Policy Act of 2005:

Commercial Building Deduction

The Act contains provisions for commercial buildings that make improvements to their energy systems.

Energy improvements completed in 2006 and 2007 are eligible for tax deductions of as much as $1.80 per square foot.

The incentives focus on improvements to lighting, HVAC and building envelope.

Improvements are compared to a baseline of ASHRAE 2001 standards.

Many buildings are eligible for tax deductions for improvements completed or planned within the normal course of business, and can thus "free ride" for the new incentives.

Achievement of these benefits requires cooperation between the facilities/energy division of a business and its tax department. A tax advisor with engineers on staff may serve as a bridge between these two historically separate business divisions.

For municipal buildings, benefits are passed through to the primary designers/architects in an attempt to encourage innovative municipal design.

These benefits emanate from the Department of Energy's desire to make all buildings "zero energy" within 20 years.

Read more: http://en.wikipedia.org/wiki/Energy_Policy_Act_of_2005

from Knauf Insulation:
IRS releases guidelines for 2005 Energy Act
Tax credits for new home insulation, adding insulation to existing homes explained

(WASHINGTON, DC and SHELBYVILLE, Ind., February 21, 2006) The U.S. Treasury Department and Internal Revenue Service today released more detailed guidance for homeowners and builders on qualifying for energy efficiency tax credits within the Energy Act of 2005. According to Knauf Insulation, these incentives provide additional incentive for homeowners and builders to insulate to optimum levels, leading to more valuable and sustainable homes and long-term savings on utility costs.

Read more: http://www.knaufusa.com/news/company_related/irs_releases_guidelines.aspx

from Thompson Online:
Energy Act of 2005 Creates Incentives for Energy Efficiency in Commercial and Residential Real Estate

August 30, 2005 - Overview: The Energy Policy Act of 2005, which President Bush signed on August 8, 2005, is an omnibus law comprised of 18 titles that alters the energy landscape significantly. Click to view our overview of 31 Key Effects of the Energy Policy Act of 2005.

The Energy Policy Act of 2005 (the "Act") authorizes a number of incentives to encourage the use of energy efficient equipment, appliances, and materials in government and commercial property and residential homes. Among other initiatives, the Act:

1. Creates new annual graduated energy usage reduction goals for all federal buildings, with the final goal of 20% reduction in energy consumption from 2003 levels by 2015 (§ 102).

2. Mandates the creation of new federal building energy efficiency performance standards. These revised standards must require that, if life-cycle cost-effective, new federal buildings be designed to achieve energy consumption levels at least 30% below those of the version currently in force, and sustainable design principles (i.e., "green building" techniques) must be utilized (§ 109).

3. Permits the U.S. Department of Energy ("DOE") to make grants for state energy conservation plans to assist local government to improve the energy efficiency of public buildings. To be eligible, such assistance must promote either the construction of new energy-efficient public buildings that use at least 30% less energy than a comparable public building or the renovation of existing public buildings to achieve reductions in energy use of at least 30%. This section authorizes $30 million per year in appropriations for 2006-2010 (§ 125).

4. Allows deductions for the cost of energy efficient commercial building property, not to exceed $1.80 per square foot, for lighting, heating cooling, ventilation, water heating and the building envelope (e.g., insulation, windows, doors, roofing, exterior materials) when installed as part of a design to increase energy efficiency by 50% for these items. If the savings achieved are less than 50%, but otherwise meet the DOE's goals for energy efficiency, the deduction shall be reduced to $0.60 (§ 1331).

5. Adds credits for energy efficient residential homes, including: $2,000 for a house with 50% lower energy consumption than a comparable house, with 1/5 of that 50% coming from elements of the building envelope; and $1,000 for a house with 30% energy savings, with 1/3 of such savings coming from building envelope elements (§ 1332).

6. Creates credits for energy efficient improvements to existing homes, including 10% of the amount paid for qualified improvements up to certain aggregate limits (§ 1333), $100 or more for energy efficient appliances that meet the Energy Star criteria (§ 1334), and 30% of the amount paid for photovoltaic (solar) panels, solar water heating, and fuel cell property, not to exceed $2,000, $2,000, and $500 respectively. The credit can be carried over to the next year if costs exceed the limit, and installation costs may be added to the mix (§ 1335). There is also a credit of $200/kW for microturbines generating less than 2 MW for on-site generation (§ 1336).

Read more: http://www.thompsonhine.com/publications/publication130.html

from Think Insulation & Internal Revenue Service:
IRS releases commercial building guidelines for 2005 Energy Act

(WASHINGTON, DC and SHELBYVILLE, Ind., June 5, 2006) The Internal Revenue Service today released more detailed guidance for commercial building owners on qualifying for energy efficiency tax credits under the Energy Act of 2005. Knauf Insulation supports these incentives as a way to encourage energy conservation and operational savings: Insulation already installed in U.S. commercial buildings saves $10 billion in energy costs every year - it’s estimated that if U.S. businesses could cut another 10% from operating costs through energy efficiency, it would free an additional $10 billion annually for other economic activity.

Commercial buildings qualify for a $1.80 per square foot tax deduction for energy efficiency improvements under the Energy Act. Documentation released today specifies that these improvements must involve the building’s envelope, HVAC, hot water and interior lighting systems and lead to a 50% energy efficiency improvement over ASHRAE Standard 90.1-2001. This would include duct and other insulation additions and enhancements. If energy efficiency improvements do not meet the 50% target, building owners may still qualify for a $.60 per square foot deduction by meeting a 16 2/3% energy savings target.

Full details on the commercial tax credit guidelines can be found at www.irs.gov/pub/irs-drop/n-06-52.pdf.

Read more: http://www.thinksulationusa.com/releases/IRS2.pdf

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