In a previous post about ‘Tax Incentives for Energy-Saving Construction‘ we highlighted the significant tax savings available for any energy-saving systems you’re building or installing. In this post, we expand on the reasons to go greener.
Did you know? In the United States, buildings account for:
- 39% of total energy use
- 68% of total electricity consumption
- 30% of landfill waste
- 38% of carbon dioxide emissions
- 12% of total water consumption
In addition, energy use in buildings accounts for nearly 20% of greenhouse gas emissions in the U.S.
Now, more than ever, the world is looking for opportunities to be greener and more energy efficient in building design and construction. And the IRS has added incentives to make this happen!
Danto Builders understands the huge potential value of tax incentives available for energy efficiency in new construction. For that reason – on behalf of our clients – we focus on the design and build aspects of construction that will have the best energy efficiency. This is not only better for the environment but also has major potential tax-saving implications for our clients.
Tax Incentives for Energy-Saving Construction
If you’re an owner or developer of a commercial building, or designer of energy-efficient systems for government buildings, it’s important to know the significant tax savings available for any energy-saving systems you’re building or installing.
The IRS is rewarding commercial building owners and designers, including architects, engineers, contractors who design energy-efficient systems. 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 commercial building owners, building designers (architects, engineers, contractors, lighting companies and ESCOs), CPAs, 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.
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 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.
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.
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, dba Maximum Energy Payback (MEP) 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 and 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.
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 commercial building owners, designers, architects, engineers, lighting companies, ESCOs, and CPAs), and these certifications have helped saved millions of dollars in taxes.
What types of buildings can get these certifications?
179D energy tax certifications can be used by a wide range of industries, including:
- Healthcare – hospitals, nursing homes and care facilities
- Hospitality – hotels and restaurants
- Manufacturing
- Warehouse & distribution centers
- Commercial – office buildings, including parking garages
- Auto Dealerships
- Education – schools, universities
- Government – Courthouses, libraries, municipal buildings, community centers, military facilities, schools
- Residential – apartment buildings (4 stories and higher)
- Parking Garages
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. Interested in learning more about Maximum Energy Payback’s energy certifications? Contact Debbie Danto at debbie@dantobuilders.com or call (954) 229-2006.
Strict IRS requirements
The 179D energy tax certifications required to take the deduction can only be done by a licensed contractor or engineer who understands the strict IRS requirements. The tax incentive can apply to energy-efficient systems, including:
- HVAC
- Building envelope
- lighting systems
A history of success in the certification process
MEP has completed hundreds of certifications for commercial building owners, designers, and CPAs, across the country, saving our clients millions of dollars in taxes.
MEP has certified hotels, manufacturing facilities, distribution centers, parking garages, schools, universities, courthouses, office buildings, community centers, municipal buildings, warehouses, hospitals, apartment buildings, military facilities, libraries, and nursing homes.
To learn more about the tax incentives to design and construct energy-efficient buildings, contact us and let’s talk!