LED Lighting Tax Deductions: Don't Get Left In The Dark
These days, just about everyone is doing their part to help protect the environment we live in. People are “going green” by recycling, saving energy, driving hybrid cars, carpooling, conserving water and eating sustainable foods. And they’re not alone. Commercial buildings, apartment complexes, supermarkets, warehouses, hotels and more are also taking the necessary steps to conserve resources and reduce their carbon footprint. One way they are doing this is by adding LED lighting to their facilities. In fact, doing so enables businesses to take advantage of the Section 179D Commercial Building Tax Deduction.
The ABC’s of LED
Light-emitting diode (LED) lights deliver excellent light with a minimal amount of energy. They stay relatively cool and don’t give off excess heat, which helps reduce the cost of running air conditioning systems. Another key benefit of LED lights is how rarely they need to be replaced. LED bulbs can last up to ten times longer than fluorescent bulbs. Lastly, LED bulbs offer optimum safety in the workplace because they are 100% mercury free.
Go Green, Deduct Green
Section 179D was added as part of the Energy Policy Act of 2005. It lets businesses take a tax deduction for the cost of installing energy-efficient LED lighting systems. In order to qualify, you will need to purchase and install your LED lights on or before December 31, 2015. Your lights need to reduce the overall energy that is used in your business offices by at least 25%. If you are making the switch to LED lights for a warehouse, they must reduce the energy by at least 50%. Once your new lighting system is installed, you will need to schedule an inspection from an engineer, contractor or lighting professional to measure and certify your true energy savings using special computer software.
Under the current Section 179D provision, which is scheduled to expire at the end of 2015, the Federal Tax Code provides a tax deduction for energy efficiency improvements to commercial buildings. A building may qualify for a tax deduction under Section 179D not to exceed $1.80/ft² for whole building performance or $0.60/ft² for a partially qualifying property for envelope, heating, ventilating, and air conditioning (HVAC), or lighting improvements. In addition, a building may qualify with a reduced installed lighting power under the interim lighting rule. Energy simulations are required to show compliance with the energy and power cost savings requirements. Check out this cool 179D calculator on the U.S Department of Energys Website to see if your building qualifies.
http://apps1.eere.energy.gov/buildings/commercial/179d/
