So much of what goes on In Washington gives me a headache. But, in my opinion, there is one legislative item that could be of great benefit to consumers and homeowners. This bill, introduced into the Senate and in committee now, seeks to extend tax deductions for building upgrades, make it easier for taxpayers to get deductions, and give more money back.
The bipartisan legislation is called the Commercial Building Modernization Act (S.3591) and it would reform the existing Energy Efficient Commercial Building Tax Deduction, which is widely known by its federal tax code section: 179D.
According to the Alliance to Save Energy, Section 179D is a federal tax deduction for the costs of installing energy-efficient systems in commercial and multi-family buildings, and it was introduced as a part of the Energy Policy Act of 2005. Section 179D is set to expire at the end of 2013, but the Commercial Building Modernization Act aims to extend it to Dec. 31, 2016.
The 179D offers up to $1.80 per square foot in deductions for a 50 percent reduction in total annual energy and power costs, and partial tax deductions are also available for improvements to a building envelope, HVAC or lighting systems.
The Commercial Building Modernization Act offers deductions from $1.00 per square foot for a 20 percent source energy savings, up to $4.00 per square foot for an improvement of 50 percent or more in energy savings.
To lower some of the costs for upgrades upfront, building owners would be able to receive up to 60 percent of the deduction based on expected energy savings. And to ensure the energy savings are achieved, the remaining 40 percent of the deductions would be disbursed after the applicant proves the upgrades actually save the claimed amount of energy.
The bipartisan legislation would also simplify the process of applying for the deduction.
An added bonus to achieving greater national energy security, the legislation also would help strengthen the American economy by generating an estimated 77,000 new jobs in construction, manufacturing, and service, according to a 2011 analysis by Real Estate Roundtable, Natural Resources Defense Council, U.S. Green Building Council, and others.