Tax Deductions Are Available For Going Green

The federal government wants you to go green if you own a commercial or residential rental building.?

The newly enacted Inflation Reduction Act extends and expands valuable tax credits for commercial or residential rental buildings that utilize certain green energy improvements.?

These credits and deductions are complicated and subject to new restrictions.

By installing solar, wind, or other renewable energy facilities in your commercial or rental buildings you can claim the Business Energy Investment Tax Credit?

The Inflation Reduction Act retroactively increased this credit from 26 percent to 30 percent for projects begun before 2025.?

Starting in 2023, you can qualify for 10 percent bonus credits available for projects

? complying with domestic content requirements,?

? located in low-income communities, or?

? located in communities involved with fossil fuels.?

One more thing: the ITC is non-refundable, but it is transferable. You can sell it to an unrelated taxpayer.

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Energy Efficient Commercial Buildings Deduction

This tax deduction enables owners to deduct in one year all or part of the cost of various energy improvements made as part of a plan to reduce total energy costs including, heating and cooling systems, roofs, walls, floors, and interior lighting.?

Under the old deduction, building owners had to improve a building’s energy efficiency by 50 percent. Now, building owners have to improve energy efficiency only by a minimum of 25 percent.?

The old deduction was $1.88 per square foot however, starting in 2023, the new law increases the deduction to $5.00 per building square foot if the owners meet prevailing wage and apprenticeship requirements.

If you want to discuss these tax credits, please call us on our direct line at (817) 383-0927 or book a complimentary strategy session here.?

Sincerely,

Francis and Reeves Advisory Team?