Download the IRS notice: Deduction for Energy Efficient Commercial Buildings here (PDF, 100K).
The commercial building deduction, which was enacted in the Energy Policy Act of 2005, allows taxpayers to deduct the cost of energy-efficient "property" installed in commercial buildings.
Such property might include LED luminaires and signage from Permlight Products, who issued a press release to announce their Enbryten products meet the reduced energy demands outlined in the new IRS notice (see for example Permlight launches high output warm white recessed LED down light).
The amount deductible may be as much as $1.80 per square foot of building floor area for buildings that achieve a 50-percent energy savings target. The notice provides that buildings below the 50-percent threshold may, nevertheless, qualify for a deduction of up to 60 cents per square foot of building floor area if they meet a 16.67-percent energy savings target.
“We are continually excited about government programs to encourage the use of energy efficient products,” stated Manuel Lynch, President and CEO of Permlight Products. “Our LED lighting systems provide a 10-15X deduction in power over neon and a 2X deduction over fluorescent recessed cans used in business. We have seen an 80% reduction in our lighting bill at our corporate office by replacing all incandescent and fluorescent lighting with our new LED fixtures. We are pleased that the IRS is now supporting the adoption of our technology.”
Before claiming the deduction, the taxpayer must obtain a certification that the required energy savings will be achieved. According to the notice, the Department of Energy will create and maintain a public list of software that must be used to calculate energy savings for purposes of providing the certification.