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Some HVAC Upgrades Are Better Candidates for EPAct Tax Deductions




July 26, 2012 - HVAC

Today's tip from Building Operating Management comes from Charles Goulding of Energy Tax Savers, Inc.

Facility managers planning many types of HVAC upgrades should take a close look at Energy Policy Act (EPAct) tax deductions. Although Section 179(D) deductions are not limited to specific types of HVAC equipment, and any HVAC project that meets the criteria spelled out in Section 179(D) would qualify for the deduction, experience to date has shown that most deductions are for the following types of projects:

1. Geothermal (ground source heat pumps)
2. Thermal storage
3. High-efficiency package terminal air conditioning (PTAC) units in apartments and hotels
4. Centralized HVAC in apartments and hotels
5. Energy recovery ventilation
6. Demand control ventilation
7. Chillers in buildings of less than 150,000 square feet
8. Very efficient heaters in warehouse, industrial and other spaces with no air conditioning
9. VAV (variable air volume) devices in buildings of less than 75,000 sq. ft.
10. Chilled beam ceilings
11. Magnetic bearing chillers

The maximum EPAct deduction is $1.80 per square foot. To get that deduction, the building must reduce overall energy costs by 50 percent compared to a building designed to meet the 2001 version of ASHRAE Standard 90.1. If a project doesn't reduce energy use enough to qualify for that deduction, there are tax deductions of up to $0.60 per square foot each for lighting, HVAC and the building envelope.

To qualify for a deduction, an HVAC project must reduce energy costs at least 16.67 percent below the costs for a building designed to meet ASHRAE 90.1-2001. The project must use energy modeling to show the energy cost savings.

Facility managers interested in EPAct tax deductions should act soon. The deduction is set to expire on Dec. 31, 2013.

This has been a Building Operating Management Tip of the Day. Thanks for listening.

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