PISCATAWAY, N.J.—The U.S. Internal Revenue Service (IRS) recently announced that commercial property owners can potentially enjoy significant tax deductions by making their buildings more energy efficient, and in its Notice, also officially approved Trane’s TRACE 700 software to certify energy savings.
Trane’s TRACE 700 software, the first of four programs accepted by the IRS for energy savings certification, enables building owners to translate energy savings into tax deductions. The commercial building deduction, enacted in the Energy Policy Act of 2005, allows taxpayers to deduct the cost of energy efficient property installed in commercial buildings.
Buildings that achieve a 50 percent energy savings target can deduct up to $1.80 per square foot of building floor area. Buildings below the 50 percent threshold may still qualify for a deduction of up to 60 cents per square foot of floor space, if they meet a 16.67 percent energy savings target for HVAC equipment.
“No matter what kind of HVAC system a building uses, it’s to the owner or leaseholder’s advantage to run the TRACE 700 software to see what kind of savings they might be able to collect at tax season,” sayes Thomas Gorman, marketing manager, C.D.S. “The financial savings achieved through a commercial building deduction are likely to have a significant impact on a company’s bottom line.”
The TRACE program is an analytic tool for building system designers. It enables them to optimize the building, system and equipment designs on the basis of energy utilization and lifecycle costs. Using the TRACE program in the early stages of building planning allows the building owner and design team to receive the maximum benefit of a detailed analysis. TRACE can also be invaluable for assessing the energy and economic impact of building renovation or system retrofit projects. Consult with your tax advisor to determine how this tax benefit may help your business.
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