1. CAPITAL REVIEW GROUP – COMPREHENSIVE ENERGY AND TAX SOLUTIONS
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Tax Incentives for Energy Efficiency – Application of
§179D of EPAct for a Auto Dealership
Improving the Pay-back Period for Enhancing Energy
Efficiency and Improving Sustainability
Benefit Illustration Solutions & Capital Discovery®
An owner of a 287,000 square foot auto dealership four CRG determined that the building systems qualified
years ago underwent a complete redesign of their based upon energy efficiency for the §179D tax
facility. The project scope included reconstruction of the deductions, while going back four years for the
interior of the building, significant upgrades, and redesigned facility. The Energy Policy Act of 2005
redesign of the exterior facade. The goal was to make (EPAct) includes the §179D tax deduction for
the facilities more contemporary, create a customer investments in “energy-efficient commercial building
friendly environment, and to integrate energy property” designed to significantly reduce the heating,
efficiencies. To improve efficiencies and enhance cooling, water heating, and interior lighting energy
comfort, the redesign included installing an HVAC system cost of new or existing commercial buildings. This
with two high-volume, low velocity air circulation energy-efficient commercial building property must
systems for low energy use and low maintenance; smart be placed into service between January 1, 2006 and
solar skylights augmented by LED’s throughout; wireless December 31, 2013 and the Revenue Procedure 2011-
building automation controls; Low E II glass with very 14 allows a claim on the deduction back to 1/1/2006,
high R factor and very low U factor; and batt insulation. and for some tax payers, to claim this deduction
The completed project enhanced the overall customer without amending tax returns. §179D allows for a
experience as well as provided ROI through whole building deduction of $1.80/square foot total of
implementation of energy efficient systems. $.60/square foot deduction for Lighting, $.60/sq.
deduction for HVAC (including water heater) and a
Challenges $.60/deduction for the building envelope when
ASHRAE Standard 90.1-2001 is exceeded by specific
percentages.
•Exploration of incentives available four years after the
project was completed.
Based on the energy efficiency attained and
•Provide information to owners on incentives available
to enhance ROI, after the redesign occurred. application of the Revenue Procedure 2011-14,
•Capitalizing on all tax opportunities associated with the auto dealer was allowed to claim the full
energy efficiencies. deduction amounting to $1.80 per s/f totaling
$516,600.00 with no need to amend their tax
returns.
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