Stack the Savings: Using the Energy-Efficient Commercial Buildings Deduction & Energy-Efficient Tax Credits in Tandem

How Energy Efficiency Incentives Work Together  

The true value of energy-efficient tax credits for businesses is in their interactions.  

In this post-IRA era, savvy taxpayers are increasingly turning to a powerful trio of tactics to maximize savings.   

• • Cost segregation — an excellent way to decrease tax liability and increase cash flow — can be performed on virtually any type of property.   

• • And if that property was recently constructed or improved, it may also qualify for the 179D Deduction to boost benefit.   

• • And if certain energy property — such as solar panels — are involved, the ITC Credit may also be claimed, creating a triple stack of incentives that maximizes savings and boosts ROI.   

• • Were EV Chargers installed?  Add on a 4th incentive – the Alternative Fuel Vehicle Refueling Property Credit (EV Charging Station Credit.)   

Can you combine energy-efficient tax credits and deductions?    

Yes, businesses can combine energy efficient tax credits and deductions if they meet eligibility requirements and do not claim the same expense twice.  

Building a Tax Strategy for the Long Run  

To maximize energy-efficient tax savings, companies need to compile a comprehensive tax plan.   

Strategic Considerations:  

1. Evaluate All Potential Credits — Explore all available energy-efficient tax deductions and credits.  The right partner can help make sure no relevant incentive is overlooked.   
2. Remember That Incentives May Apply Throughout the Real Estate Life Cycle 

Consider deductions during:  

• • Design stages  
  • Renovation planning phases  
  • Capital allocation periods  

3. Secure Proper Certification and Adequate Documentation 

Businesses need to ensure proper certification when applying for energy-efficient incentives.  This is another area where the right partner can be helpful.   

Why Real Estate Investors Stand to Benefit the Most  

Energy-efficient tax credits and deductions can help real estate investors maximize profits from their investments.  

Main Advantages:  

• • May claim credits in multiple properties  

• • Energy-efficient improvements will also increase property’s value  

• • Take advantage of the growing tenant demand for energy-efficient properties  

For example, in Pennsylvania, energy-efficient tax deductions have become particularly useful in the context of rapidly developing cities and industries.  

How to Maximize Long-Term Savings  

The aim is not just to obtain a deduction; rather, it is to design an effective system for minimizing tax liabilities.  

Key Focal Points:  

• • Energy-efficient tax credits plus deductions  

• • Planning for upgrades on a multi-year basis  

• • Tax planning that integrates with business expansion  

Positive Long-Term Outcomes:  

• • Enhanced cash flows  

• • Projected financial savings  

• • Better performing buildings  

Typical Cases in Which You Qualify  

Some taxpayers just assume they don’t qualify, but eligibility criteria is wider than you might think.   

You May Qualify If:  

• • You have made improvements in lighting or HVAC 

• • You have enhanced insulation or building envelope  

• • You have added solar panels or EV charging stations   

The 179D Energy-Efficient Commercial Buildings Deduction, as well as energy-efficient tax credits, are financial strategies that can make a significant impact.   

The right partner counts.  To maximize your energy tax savings, contact the specialists at Capstan Tax.   

FAQ’s