Energy Tax Savers’ EPAct and Tax Incentives Presentation

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Energy Tax Savers’ EPAct and Tax Incentives Presentation. Geothermal Alliance of Illinois. Energy Tax Savers, Inc. Charles Goulding Charles.Goulding@EnergyTaxSavers.com. Presentation Index. EPAct Bonus Depreciation Geothermal Heat Pump Tax Credit/Grant for Business - PowerPoint PPT Presentation

Text of Energy Tax Savers’ EPAct and Tax Incentives Presentation

Energy Tax Savers, Inc. EPAct Presentation

Energy Tax SaversEPAct and Tax Incentives PresentationEnergy Tax Savers, Inc.Charles GouldingCharles.Goulding@EnergyTaxSavers.com

GeothermalAlliance of Illinois

1Presentation IndexEPAct

Bonus Depreciation

Geothermal Heat Pump Tax Credit/Grant for Business

Geothermal Heat Pump Tax Credit for Residential

22Energy Policy Act of 2005 (EPAct) Extended through 12/31/13Benefits available from 1/1/06 thru 12/31/13Incentivized areas:LightingHVACBuilding envelopeAvailable for New Construction and Existing BuildingsAlso available for tenant owned lease-hold improvementsBenefit available for Primary Designers on Government Projects

33Important IRS Notice Rev. Proc. 2011-14Taxpayers can now use 3115 process to catch up on all missed EPAct deductionsGreat for 2006/2007 new construction and retrofitsExcellent for investor groups to avoid amended individual returnsMany property owners are combining prior and current projects for the $1.8044Whos using EPAct?First MoversReasonsRetailersEnergy is a major operating cost Centralized facilities managementDistribution CentersMajor growth marketHigh economic returnHotelsMeet ASHRAE 2004 = Full EPActBi-level not required in guest roomsParking GaragesLarge facilities drive large EPAct benefitsIndustrial FacilitiesLarge facilities drive large EPAct benefitsExisting lighting is being phased out by lawOffice BuildingsMore states enact ASHRAE 2004 or higher building energy codesCar DealershipsLarge deductions for lighting and service bay heaters55Whats it Worth?Building Lighting HVACEnvelopeTotalSample Minimum Maximum MaximumMaximumSquare Footage Deduction Deduction Deduction Deduction 50,000 $ 15,000 $ 30,000 $ 30,000 $ 30,000 $ 90,000 100,000 $ 30,000 $ 60,000 $ 60,000 $ 60,000 $ 180,000 250,000 $ 75,000 $ 150,000 $ 150,000 $ 150,000 $ 450,000 500,000 $ 150,000 $ 300,000 $ 300,000 $ 300,000 $ 900,000 750,000 $ 225,000 $ 450,000 $ 450,000 $ 450,000 $ 1,350,000 1,000,000 $ 300,000 $ 600,000 $ 600,000 $ 600,000 $ 1,800,000 *Note with government buildings, the benefit goes to the primary designer66Commercial Building Immediate DeductionsStimulus Package emphasizes Energy Efficiency in Government BuildingsArchitects/Engineers/Lighting DesignersDOE goal to incentivize green design in government building sectorBenefits passed through to the primary designer of:Federaloffices, military bases, court houses, post office, labs etc.Stateoffices, transportation facilities, state universities, court houses etc.County, city, town, village etcoffices, schools, town halls, police, fire, libraries etc.

77Whats in it for Architects/Engineers/Lighting Designers?

Growth in this EPAct area for government building designers is explodingSuccessful Design Niches:K-12 Public SchoolsState Universities and CollegesMilitary BasesParking GaragesAirports88Allocation of $120,000 Tax DeductionGovernment Buildings Only99How do you Qualify? Mechanics Deductions based on improvements over ASHRAE 90.1 2001Energy efficient improvements must be depreciable assetsConverts 39 year depreciation to current deductionAvailable for installations completed between 1/1/06 & 12/31/13Can begin in prior yearsDeduction amounts:Lesser of total cost or:$1.80/sq.ft. Whole Building$0.60/sq.ft. Individual SystemsLightingHVACBuilding Envelope

ASHRAE (American Society of Heating, Refrigerating and Air-Conditioning Engineers)HVAC (Heating, Ventilation & Air Conditioning)10108 Ways to Capture Tax Deduction (1)Whole Building ($1.80/ft2) 50% Energy Cost Reduction below standard Permanent Rules partial deduction ($0.60/ft2)

(8)Interim Lighting Rules ($0.30/ft2-$0.60/ft2)25% to 40% prescribed Light Power Density (LPD) reduction below standard

Building EnvelopeLightingHVACAlternative 1(2)162/3 %(3)162/3 %(4)162/3 %Alternative 2(2)10%(3)20%(4)20%Alternative 3(5)10%(6)25%(7)15%11111111Biggest EPAct Growth AreaLEDs LEDsLEDsWhat Tends to Qualify on the HVAC side?Geothermal (Ground Source Heat Pumps)Thermal Storage High Efficiency VRF units in Rental Apartments/Dorms/HotelsCentralized HVAC in Rental Apartments/Dorms/HotelsEnergy Recovery VentilationDemand Control VentilationChillers in buildings < 150,000 sq ftDirect fired heaters in no AC Industrial SpacesVAV (variable air volume devices) in buildings $500,000 require: CPA Agreed Upon Procedure(AUP)Grant applications for >$1,000,000 require:CPA Attestation 2222Geothermal Heat Pump PropertyIncludes equipment that uses energy from geothermal sourceAt least 75% energy used by equipment must be from geothermal sourceIf not, equipment does not qualify as Geothermal Heat Pump PropertyThis may include downstream (after heat pump) items:PipesDuctworkHeat ExchangersDiffusersItems that do not use geothermal source energy do not qualifyDownstream PumpsDownstream Fans

23ConditionedGeothermal Tax Planning Example100,000 Sq. ft. Geothermal ProjectProject Cost$1,600,000Project Cost (after rebate)1,440,000Tax Credit or Grant 10%144,000After 10% Tax Credit1,296,000Remaining Basis(100% - (x10%))1,368,000Bonus Depreciation (50% for 2012)684,000Value of above at 35%239,400Total First Year Tax Benefit383,400Net Investment Before EPAct$1,056,600Excess EPAct Tax Deduction$180,0002424Residential Geothermal Heat Pump30% creditAvailable thru 12/31/16Must Meet Energy Star CriteriaCurrent Energy Star Criteria 25Closed Loop14.1 EER3.3 COPOpen-Loop16.2 EER3.6 COPDirect Expansion15 EER3.5 COP

25What does Energy Tax Savers Deliver?Pre-project EPAct Marketing MaterialComplimentary Design AnalysisComplimentary Tax Benefit AssessmentComprehensive EPAct Tax Package

-Energy Reduction Plan (ETSI Software)-Building Energy Model (ETSI Reviewed) -Tax Deduction Calculation (ETSI Software)-Owners Manual, highlighting energy savings-Design Certification (ETSI Document Creation and Review)-Post-Implementation Inspection(ETSI Document Creation and Review)-Audit Assistance

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27Energy Tax Savers Inc.http://www.energytaxsavers.com/

Energy Tax Savers144A Jackson AvenueSyosset, NY 11791Phone: 516.364.2630Fax: 631.240.5165

Email: Charles.Goulding@EnergyTaxSavers.com2828