IRS Guidelines for Energy Efficiency Tax Incentives Expected Soon

April 11, 2006
Despite the wait, BOMA encourages lighting upgrades

Guidelines for the Energy Efficient Commercial Buildings tax deduction that was included in the energy policy legislation enacted last summer are still pending in the IRS, but are expected to be released soon. The provision provides a deduction of up to $1.80 per square foot, with allowances of up to $0.60 per square foot for partial deductions for improvements in interior lighting, HVAC and hot-water systems, and building envelope systems, for energy-efficiency “property” put into place from Jan. 1, 2006 to Dec. 31, 2007.

The anticipated IRS guidelines will include information on how to certify that the energy-efficient upgrades are being installed as part of a plan designed to reduce the total annual energy and power costs of interior lighting systems, heating, cooling, ventilation, and hot-water systems of the building by 50 percent or more when compared to a reference building, which meets the minimum requirements of ASHRAE Standard 90.1-2001 (as in effect on April 2, 2003).

Despite the absence of IRS guidelines, there is no need to wait for lighting upgrades. The statute included interim lighting guidelines that will be in effect until the IRS issues its final rulemaking.

For more information on the tax deduction and what types of upgrades may qualify, visit
( This great resource was developed by the Commercial Building Tax Deduction Coalition.

This information was reprinted with permission from the Washington, D.C.-based Building Owners and Managers Association (BOMA) Intl., a resource for information on office building development, leasing, building operating costs, energy consumption patterns, local and national building codes, legislation, occupancy statistics, and technological developments. The organization’s members represents a combined total of more than 9 billion square feet of downtown and suburban commercial properties and facilities. To find out more, visit (

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