Tax Incentives for Energy-Saving Construction
If you’re an owner or developer or involved in the construction industry as an architect or engineering firm, it’s important to know the significant tax savings available for any energy-saving systems you’re building or installing.
The government is rewarding commercial construction companies and designers – as well as architects, engineers, and contractors – who create environmentally-friendly through energy-saving technologies. This reward is a tax savings, which requires 179D Energy Tax Certifications.
These tax savings were created to promote the design of energy-efficient systems and savings in a number of ways – from HVAC systems, the design and construction of the building envelope, or through lighting systems. The tax incentive applies to building renovations, in addition to new build construction.
Danto is proud to have over 10 years of success completing hundreds of certifications for CPAs, building designers (architects and engineers), commercial building owners, and others – and helping clients save millions of dollars (in taxes). With this knowledge and background, here is what developers, building owners, engineers, and architects should also know when it comes to constructing energy-efficient buildings.
The High Cost of Energy Use
According to U.S. government data, energy use is the largest operating expense in commercial buildings (especially office buildings), and accounts for approximately one-third of the building’s annual operating budget.
To make matters worse, these buildings typically waste about one-third of the energy they use. In total, energy use in buildings accounts for nearly 20% of greenhouse gas emissions in the U.S.
What are energy-efficient AND cost-effective ways to build which also maximize the 179D energy tax deductions?
Experienced architects, builders, and designers know many techniques and ways to design and build that can save energy naturally and efficiently. Here’s the wide range of considerations and methods builders can use.
Building orientation: Architects can design buildings to work with the direction of the sunlight – and even wind patterns – so buildings in areas like South Florida can be more efficient by reducing direct sun exposure. This has many long-term benefits on energy usage.
For example, the positioning of doors, windows, and overhangs can help limit sun exposure. With careful design and placement, these can help regulate the temperature throughout the year.
Design using nature and other materials: Energy-efficient designs can make use of nature to help mitigate the sun’s heat, including landscaping with trees and plantings on rooftops. For example, “cool roofs” use building materials that reflect heat and sunlight to help maintain cooler inside temperatures. According to the EPA, cool roofs absorb less heat and stay up to 50 to 60 degrees cooler than conventional materials.
Windows and doors: High-performance windows and doors are great energy-saving investments. Modern doors have little leakage and help keep out the hot air; high-tech glass works well for insulation, keeping the heat outside and the inside air cooler.
The concept of “daylighting” also helps minimize energy consumption by optimizing the use of natural light inside during the day. This includes the design of windows and glass use, as well as internal layouts and room designs, to maximize external daylight.
Mechanical systems: Almost every system within a commercial structure can be more energy efficient, from the HVAC system to lighting design to automated shut-off systems that save on fuel and energy use.
With lighting systems, LED lighting has replaced other types of lighting because of its more efficient energy use and the longer-lasting life of the bulbs themselves. This means savings on replacement costs and savings in maintenance/labor costs.
Retrofits and upgrades: Existing buildings can benefit immensely from new heating and cooling equipment and systems, as well as new lighting systems and LED bulbs.
What is Maximum Energy Payback (MEP)?
Danto Builders works with a team of experienced energy-analysis and verification professionals to investigate and provide 179D energy tax certifications. These certifications are available for both new construction and renovated buildings.
These energy tax certifications allow a commercial building owner or designer (of a government building) to take a tax deduction of up to $1.80 per square foot for energy-efficient HVAC, building envelope or lighting systems. Read here to learn more about this service from Maximum Energy Payback (dba of Danto Builders).
In the past ten years, Maximum Energy Payback is proud to have completed hundreds of 179D energy tax certifications for a wide range of U.S.-based professionals (including CPAs, designers, architects, engineers, and commercial building owners), and these certifications have helped saved millions of dollars in taxes.
What types of buildings can get these certifications?
179D energy tax certifications through the Maximum Energy Payback (MEP) can be used by a wide range of industries that qualify for the 179D energy tax benefits, including:
- Healthcare – hospitals, nursing homes and care facilities
- Hospitality – hotels and restaurants
- Warehouse & distribution centers
- Commercial – office buildings, including parking garages
- Auto Dealerships
- Education – schools, universities
- Government – Courthouses, libraries, municipal buildings, community centers, military facilities
- Residential – apartment buildings (4 stories and higher)
While the 179D energy tax incentive began in 2006, it was made permanent in 2020, and the tax incentive is taken in the year the building or renovation was completed.
For a complimentary analysis, click here.