There is a color that has been steadily gaining prominence in our society over the past few years. If you read the paper, listen to the radio, watch TV or let’s face it, if you interact with almost anyone, you will notice this color being mentioned more now than at any time in our history.
You have probably guessed that I am referring to the color Green. Green Products, Green Jobs, Green Rated and the all encompassing “Going Green” are phrases that we hear almost every day. We have even heard our President tell us that Green Jobs will play a part in our economic recovery.
Why has Going Green been propelled into the spotlight? You can speak with multiple well informed people and come away with multiple answers, but one thing has become clear to me, Green, in one form or another, is here to stay.
As a CPA in the Fort Myers, Florida office of Hill Barth & King, I am charged with having a deep understanding of the industries that effect Southwest Florida and specifically Lee County. Those industries are tourism, healthcare and construction. Out of these three industries the Green agenda seems to have the greatest effect on the construction industry. Through my involvement with the Lee County Builders Industry Association (BIA) and the Cape Coral Construction Industry Association (CCCIA) I am updated frequently concerning the Green initiatives that are already in place, as well as those that may be coming in the near future. We are at a time in the Green movement that requires us all to learn as much as we can about how Going Green will affect our professions and our lives.
I am writing this series of articles in an effort to contribute to that educational process, and as a CPA I will limit my contribution to the area that I specialize in: tax planning.
As many of you know, when our government gets involved in something, you can be sure our system of taxation will be affected. When the government is attempting to create jobs and promote an industry, the tax implications are almost always good for those businesses and individuals associated with, or doing business with, that industry. In an effort to facilitate the creating of Green jobs the federal and state governments have offered a wide range of energy tax credit incentives that need to be explored. Early planning is essential to maximizing many of the available energy tax incentives.
In the first installment of my Going Green series I am highlighting the energy-efficient commercial business deduction (Section 179D). This new deduction allows businesses to deduct up to $1.80 per square foot of space in new or existing buildings where they install interior lighting, HVAC systems, or building envelope property that reduces power use to 50 percent compared to a reference building.
In order to utilize the full $1.80 per square foot deduction, all three phases of the property must be implemented. This deduction must be certified using qualified individuals and specific types of software mandated by the government. However, up to a $0.60 per square foot deduction is available for certain lesser reductions involving implementation of the building phases separately.
The most common of the three phases of the deduction is for energy efficient lighting. There are currently special rules for lighting that make meeting the standards for up to $0.60 per square foot deduction easier to obtain. In addition, if energy efficient commercial building property is installed on or in property owned by a tax exempt entity, the IRS may issue a regulation allowing the deduction to be allocated to the person primarily responsible for designing the property instead of the owner of the property. For purposes of taking the energy efficient commercial building property deduction, the person primarily responsible for designing the property is treated as the taxpayer. The provision expires for property placed in service after 2013. What does this mean for a business who builds a 20,000 square foot building that qualifies for this deduction? It means an additional tax deduction of up to $36,000.
To find out more about this opportunity please contact one of the CPAs in our Fort Myers, Florida office. We are fully equipped to assist in both the tax implications and the certification process.
In the next “Going Green” article, I will highlight some of the energy tax credit incentives that are available to individual taxpayers.
Keith A. Veres, CPA is a Principal with Hill, Barth & King LLC in the Fort Myers, Florida office. Keith has worked as a CPA helping clients in Fort Myers, Cape Coral and other Southwest Florida communities for the last 8 years. He has been with Hill, Barth & King LLC, a top 75 accounting firm, since 1991. Keith can be contacted by phone at 239-482-5522 or email at email@example.com.