Tax Deductions for HVAC Efficiency

Part 1: More HVAC Projects Qualify for Federal Tax Deductions

Part 2: Geothermal, VAV Devices Also Offer HVAC Tax Savings

Part 3: EPAct Tax Deduction Encourages Facility Managers to Think Holistically

Part 4: HVAC Product Showcase

EPAct Tax Deduction Encourages Facility Managers to Think Holistically

By Charles Goulding, Jacob Goldman and Kenneth Wood - April 2010 - HVAC

The EPAct tax deduction is designed to encourage facility managers to look at a building holistically and to utilize integrated design to reduce overall building energy use. Facility managers can take advantage of major improvements in lighting system efficiency to leverage HVAC system efficiency and use the combined cost savings to obtain multiple tax deductions. Simply stated, buildings with energy efficient lighting are well-positioned to get further tax savings from efficient HVAC.

For example, a building that already has efficient lighting — increasingly including LED lighting — may well be able to achieve Section 179(D) tax deductions of $1.20 to $1.80 per square foot for installing a geothermal, thermal storage or chilled beam ceiling system.

The same goes for non-air-conditioned warehouses with LED or other efficient lighting that install very efficient heaters. In those spaces in northern states, heating is typically the second highest energy cost, after lighting, which may account for 50 to 70 percent of total energy costs. If lighting has been upgraded, energy efficient heaters, which can provide energy cost savings of eight percent or more compared to a building designed to meet ASHRAE 90.1-2001, offer a good opportunity for larger tax deductions.

In fact, a facility with LED or other efficient lighting that installs any of the 11 efficient HVAC projects is a good candidate for a tax deduction of $1.20 to $1.80 per square foot.

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