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15 Ways to Improve Lighting Quality In Commercial Applications
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An Introduction to EPAct
The Energy Policy Act of 2005 establishes a long-range energy policy to combat the nation’s growing energy crisis. Effective Jan. 1, 2006, through Dec. 31, 2013, the U.S. government is offering substantial, accelerated tax incentives as a reward for installing or retrofitting energy-efficient lighting, HVAC and/or building envelope technologies in qualifying applications.
Lighting, a critical component of energy use today, costs 40% of the average commercial building’s electric bill. Energy efficient upgrades reduce energy consumption and operating costs by 30 to 50% and often pay for themselves within months.
Generally, lighting retrofit investments are amortized over the life of the system. One of the most significant benefits of EPAct 2005 is that it allows a larger portion of the capital investment to be depreciated in the first year.
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EPAct 2005 Qualifications
To qualify for the EPAct 2005 tax deductions, a commercial building property must:
Be located in the U.S. and fall within the scope of ASHRAE/IES Standard 90.1-2001; and Receive an upgrade/installation of:
(1) interior lighting system, or
(2) heating/cooling/ventilation/hot water systems, or
(3) building envelope that was put in service between Jan. 1, 2006 and Dec. 31, 2013
Be certified as being an “energy-efficient property,” defined as one that has 50% of the total annual energy and power costs of a building satisfying ASHRAE/IES Standard 90.1-2001.
To receive the tax deduction, the deduction must:
Not exceed the cost of the upgrade, including materials, labor and design; and
Be taken in the taxable year the property or upgrade is placed in service (2006 - 2013); and
Be calculated based on the square footage of the upgraded building.
– Up to $1.80/sq. ft. for “energy-efficient property”
– Up to $0.60/sq. ft. each for interior lighting, HVAC/hot water and building envelopes
To claim the tax deduction*, you must be:
The owner or entity who paid to have the commercial building constructed or renovated
The party primarily responsible for designing the publicly owned property
* Circumstances vary widely. Before pursuing or claiming any deduction described in this brochure, consult your tax advisor concerning your specific tax situation and potential changes in the applicable tax laws.
For additional information: Lighting Tax Deduction
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