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CAPITAL REVIEW GROUP – COMPREHENSIVE ENERGY AND TAX SOLUTIONS Tax Incentives for Energy Efficiency – Application of §179D of EPAct for a Auto Dealership Improving the Pay-back Period for Enhancing Energy Efficiency and Improving Sustainability Benefit Illustration An owner of a 287,000 square foot auto dealership four years ago underwent a complete redesign of their facility. The project scope included reconstruction of the interior of the building, significant upgrades, and redesign of the exterior facade. The goal was to make the facilities more contemporary, create a customer friendly environment, and to integrate energy efficiencies. To improve efficiencies and enhance comfort, the redesign included installing an HVAC system with two high-volume, low velocity air circulation systems for low energy use and low maintenance; smart solar skylights augmented by LED’s throughout; wireless building automation controls; Low E II glass with very high R factor and very low U factor; and batt insulation. The completed project enhanced the overall customer experience as well as provided ROI through implementation of energy efficient systems. Challenges •Exploration of incentives available four years after the project was completed. •Provide information to owners on incentives available to enhance ROI, after the redesign occurred. •Capitalizing on all tax opportunities associated with energy efficiencies. Solutions & Capital Discovery® CRG determined that the building systems qualified based upon energy efficiency for the §179D tax deductions, while going back four years for the redesigned facility. The Energy Policy Act of 2005 (EPAct) includes the §179D tax deduction for investments in “energy-efficient commercial building property” designed to significantly reduce the heating, cooling, water heating, and interior lighting energy cost of new or existing commercial buildings. This energy-efficient commercial building property must be placed into service between January 1, 2006 and December 31, 2013 and the Revenue Procedure 2011- 14 allows a claim on the deduction back to 1/1/2006, and for some tax payers, to claim this deduction without amending tax returns. §179D allows for a whole building deduction of $1.80/square foot total of $.60/square foot deduction for Lighting, $.60/sq. deduction for HVAC (including water heater) and a $.60/deduction for the building envelope when ASHRAE Standard 90.1-2001 is exceeded by specific percentages. Based on the energy efficiency attained and application of the Revenue Procedure 2011-14, the auto dealer was allowed to claim the full deduction amounting to $1.80 per s/f totaling $516,600.00 with no need to amend their tax returns. Address: 1430 East Missouri Ave Suite B-165 Phoenix, AZ 85014 Toll Free: 877.666.5539
