Energy Efficiency Tax Benefits

"Certifying Buildings for Energy
Efficient Tax Benefits"

Whether you are looking for residential or 
commercial building tax benefits, give us a call for a 
free analysis
Nationwide Service
(715) 340-2970

Schultz Energy Consulting's team of experienced professionals will help you determine your building's eligibility and qualification for tax benefits.

Section 45L 

Residential & Multi-Family
Section 45L provides for a $2,000 tax credit for each dwelling unit that is certified for energy efficiency 

Section 179D 

Energy efficient commercial buildings are eligible under section 179D for a tax deduction of up to $1.80 per square foot. 

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Schultz Energy Consulting, LLC
3276 Howard Ave
Stevens Point, WI  54481

p: 715-340-2970

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John Schultz, President

Energy Efficiency Tax Benefits


by John Schultz on 09/10/14

The origin of the Section 179D tax deduction came as a part of EPACT 2005. Congress wanted to encourage green projects, by incentivizing the installation of energy efficient systems in commercial buildings for any of the following parties.

1. The owner(s) of the building
2. The tenant(s) of the building
3. The designer or rehabilitation of an energy-efficient government building. (Architect, engineer, contractor etc.)

Your building is eligible for as much as $.60/square foot/system for HVAC, lighting and building envelope.  There by creating a potential deduction of $1.80/sq./ft when all 3 systems qualify to the maximum guideline. The deductions are available for buildings built or retrofit for energy efficiency after December 31, 2005.

Guidance for claiming the EPACT deductions has been provide through additional IRS notices since the bill came into effect. The rules and procedure for ensuring qualification were enumerated under IRS notice 2006-52. This notice describes in detail how a new building or retrofit qualifies.

The IRS notice requires the taxpayer to have the building certified by a qualified inspector, to ensure that it meets the energy efficiency guidelines of 179D. It further specifies what software to use in calculating power and energy usage. Further incentive was provided under IRS Notice 2008-40. The notice allowed government and non taxpaying entities to pass the applicable deduction to the primary designer of the qualifying buildings.

Up to 2011, those taxpayers seeking to claim the 179D tax deduction were restricted by the 3 year statue of limitation for filing an amended tax return. That restriction was lifted through the distribution of Revenue Procedure 2011-14, under which some taxers may bypass the statue of limitation. Under this ruling the deduction may be claimed all the way back to January 1, 2006, without filing an amended return.

Under this Revenue Procedure, applicants qualifying to claim the deduction were allowed to take the the deduction by filing a form 3115 (Application for Change in Accounting Method). The taxpayer can thereby take the entire catch up deduction on the return being filed. Under this rule taxpayers could possibly claim all the deductions from 2006-2012 on one return. Significantly reducing and perhaps eliminating their tax burden all together.

The decision whether to amend returns or file a 3115 form depends on the taxpayer’s situation. If your taxable income has changed to the negative from prior years, lowering your tax bracket, it may make sense to amend the earlier returns. The applicability of Revenue Procedure 2011-14 is also dependent on whether deductions have already been claimed through original or amended returns. Each taxpayer should have their tax professional thoroughly analyze their situation . To determine which approach is most advantageous. Applying the the rule in this manner will allow each taxpayer the maximum deduction allowed under the law.

Schultz Energy Consulting, LLC. Is in the business of certifying buildings for property owners under sections 45L and 179D. You should adhere to the tax advise of your tax professional for the details of filing your return or change of accounting method, form 3115. You can contact Schultz Energy Consulting, LLC at (715)340-2970, or via our website and for details of the certification process. We are located in Stevens Point, WI, with associates available for the certification process Nationwide.


by John Schultz on 09/07/14

download (2)In what has become a familiar event in Washington, Congress has allowed a package of more than 55 tax provisions commonly referred to as “tax extenders” to expire on Dec. 31, 2013. Allowing the tax extenders to expire does not necessarily mean these provisions will disappear forever, as Congress frequently fails to deal with them by their deadline and the expiration of these tax extenders has happened numerous times over the past several years. Typically Congress eventually reenacts them retroactively, which will likely be the case again this year.

For energy efficient building tax benefits, the tax extenders that expired at the end of last year include Section 179D and Section 45L.

Energy Efficient Commercial Buildings Deduction

Under Code Sec. 179D, a deduction is allowed for all or part of the cost of energy-efficient commercial building property. The deduction cannot exceed the excess (if any) of the product of $1.80 and the square footage of the building, over the aggregate amount of the energy efficient commercial building deductions allowed with respect to the building for all prior tax years. The basis of that property is reduced by the amount of the deduction allowed. The deduction does not apply to property placed in service after December 31, 2013.

Credit for Construction of New Energy Efficient Homes

Under Code Sec. 45L(g), certain contractors are allowed a credit for constructed or manufactured qualifying energy efficient homes in the year such homes are sold or leased to other persons for use as a residence. The amount of this energy efficient home credit is $2,000 or $1,000, depending on whether the home is constructed or manufactured and on the energy saving standards satisfied. The credit expires for qualified new energy efficient homes sold or leased after December 31, 2013. See Parker Tax ¶107,800.

Consistent with past behaviors, Congress is currently working to resurrect the expired provisions. Senate Majority Leader Harry Reid (D-Nev.), recently introduced the Tax Extenders Act of 2013 (S. 1859), which would extend through the end of 2014 the overwhelming majority of the expired provisions, which unfortunately means Congress will be right back in this will-they-or-won’t-they mess next December.

According to House Ways and Means Committee Chairman Dave Camp (R-Mich.), he intends to look at all the extenders during the upcoming 2014 tax reform debate. Additionally, Senate Finance Committee Chair Max Baucus (D-Mont.) and Ranking member Orrin Hatch (R-Utah) have both stated that extenders should be addressed as part of comprehensive tax reform. However, several Finance Committee Democrats believe that certain critical temporary tax provisions should be addressed now. If a comprehensive tax overhaul moves next year, some of the expiring provisions could be reworked permanently as part of it, while others would be allowed to die.

Extending them all, according to the Congressional Budget Office, would cost more than $938 billion over a 10-year window.


by John Schultz on 09/07/14

This post is presented to provide general information on the new federal tax credit and is not intended to be an interpretation of eligibility for the tax credit. Please consult with a qualified tax advisor to discuss eligibility.

Q: In general what allows a home to qualify for the tax credit?

A: To meet the energy saving requirements, a home must use no more than 50% of the energy used by a home built to 2006 International Energy Conservation Code (IECC) standards.

Q: Can multi-family homes be eligible for the tax credit?

A: Yes. The IRS defines all homes are eligible for the tax credit as long as the building is not more than three stories above grade in height.

Q: How does a builder determine if their homes will qualify for the tax credit?

A: The only way to determine if a home will qualify for the tax credit is to have an analysis done using one of the approved IRS software programs. To find the most current list of these programs, click on IRS Eligible Software Programs.

Q: Who can qualify for the new homes tax credit?

A: Under the provision for energy efficient homes tax credit, an eligible contractor who constructs a qualified new energy efficient home may qualify for the credit. For specific qualifications to be eligible for the tax credit please consult with a qualified tax advisor.

Q: What form must a builder complete the tax credit?

A: To claim the tax credit the eligible contractor must complete IRS form 8908. The tax form is posted on the IRS web site at

Q: Is the form complicated to complete?

A: No. An eligible contractor simply enters the total number of qualified energy homes meeting the 50% standard and multiples that amount by $2,000.

Q: What qualifies as a new energy efficient home?

A: The home qualifies for the credit if:

  • It is located in the United States;
  • Its construction is substantially completed after August 8, 2005;
  • It meets the statutory energy saving requirements, and
  • It is acquired from the eligible contractor after December 31, 2005, and before January 1, 2014, for use as a residence.

Q: Do homes eligible for the Energy Star label also meet the requirements for the tax credit?

A: No. The requirements to meet Energy Star and the tax credit are different. Qualification for Energy Star covers all energy use in a house, including water heating, lighting and appliances, while requirements for the tax credit only include space heating and cooling.

Q: Can a builder certify their own homes for the tax credit?

A: No. The IRS rules states that the person who certifies the home must "not related (within the meaning of 45(e)(4)) to the eligible contractor."

Q: Who can verify homes for the tax credit?

A: Homes must be inspected and tested by an "eligible certifier", commonly referred to as a home energy rater. To find an eligible certifier (rater) in your area, click here.

Q: Can only home energy raters certify homes for the tax credit?

A: No. The IRS rules also recognizes "an employee or other representative of a utility or local building regulatory authority may qualify for as an eligible certifier if the employee or representative has been accredited or authorized by RESNET (or an equivalent rating network) to use approved energy performance measurement methods."

Q: What verification tool is an eligible certifier (home energy rater) required to use to verify homes for the tax credit?

A: Click on IRS Eligible Software Programs for the most updated listing of approved tax credit software compliance tools approved by the IRS for tax credit compliance.

Q: What documentation must a builder have to apply for the tax credit?

A: The builder must first have the home tested by an eligible certifier (home energy rater) and obtain a signed document from the eligible certifier stating the following:

"Under penalties of perjury, I declare that I have examined this certification, including accompanying documents, and to the best of my knowledge and belief, the facts presented in support of this certification are true, correct, and complete."

The IRS recommends that the eligible builder retain the certification as part of the contractor's records to document that the home meets the requirements.

Q: What is the time period in which the tax credit can be claimed?

A: To qualify for the credit, homes must be acquired from the eligible contractor after December 31, 2005, and before January 1, 2014.

Q: Can a homeowner apply for the tax credit?

A: No, only eligible contractors can apply for the tax credit.

Q: Can homes be verified for the tax credit using the "sampling" method?

A: Yes. The IRS allows sampling as long as the builder builds at least 85 homes a year and the eligible certifier (home energy rater) follows the current Environmental Protection Agency's ENERGY STAR Homes Sampling Protocol Guidelines. Of course the certifier must also sign the required statement certifying the home's compliance.

Q: The IRS rules states that the tax credit is $2,000 per qualifying dwelling unit. How does the IRS define a "dwelling unit"?

A: The IRS defines a dwelling as a "single unit providing complete independent living facilities for one or more persons, including permanent provisions for living, sleeping, eating, cooking and sanitation."

Q: How do I find a person certified to perform the required testing and inspections to verify a home for the tax credit?

ARESNET certified rater members can certify a home for the tax credit. The directory of RESNET certified raters are posted here.  It is not required for a person to be a RESNET member to certify a home for the tax credit.

Any certified home energy rater can certify a home for the federal tax credit. A rater must be certified by a RESNET accredited home energy rating provider. A directory of RESNET accredited rating providers by state is posted here. Contact the rating provider in your state to find the certified rater in your community.

Q: What's the difference between a tax credit and tax deduction?

A: Tax deductions reduce tax payer's overall taxable income with the value of the deduction dependent on the payer's tax bracket. Tax credits on the other hand reduce the amount of tax a taxpayer owes dollar for dollar. Tax credits are more economically powerful than deductions.

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