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Tax Benefits and Rebates for Energy-Efficient Commercial Buildings

July 5, 2020

Commercial building owners understand that energy-efficient upgrades provide a substantial amount of savings in utility costs. But funding these upgrades can be difficult, especially in an expensive real estate market like Washington, DC. Fortunately, the federal government provides tax benefits for building owners who invest in energy-efficient solutions. Area government institutions also provide financial incentives for businesses that install energy-efficient lighting and other upgrades. The following list gives you information on various tax benefits and rebates for energy-efficient commercial buildings.

The Energy Policy Act of 2005

In August 2005, President Bush signed HR 6, allowing commercial building owners to take a tax deduction on energy-efficient upgrades. The deduction covers interior lighting, heating and cooling, ventilation, hot water, and the building envelope.

If your energy savings are 50% or more, you may be able to deduct up to $1.80 per square foot of space. Later changes in the bill allow you to claim a deduction of $0.60 per square foot if you can save at least 16.66% in energy costs.

You’ll need to obtain a certification that shows the amount of energy the upgrades will save you.

District of Columbia Sustainable Energy Utility Program

Commercial building owners in Washington, DC, can take advantage of a rebate program by the District of Columbia Sustainable Energy Utility (DCSEU). The program requires you to sign up on their website. They provide up to 50% cash-back (there is a cap) for LED lighting and controls, heating and cooling, and Variable Frequency Drives. If a project you’re working on isn’t on your list and provides a substantial reduction in your energy costs, you may still be eligible for a rebate.

If you’re having trouble financing your energy-efficient project, they also work with DC PACE to get your energy or water conservation project started with no out-of-pocket costs to you.

Virginia Dept of Mining, Minerals, and Energy: Energy-Efficient Buildings Tax Deduction

You may be eligible for a reduction in your local property tax based on your building’s energy efficiency. If your building is LEED or Green Globes Green Building Certified, you automatically meet the requirements. Check with your locality to see if the program is available in your area.

Dominion Virginia Power Non-Residential Heating & Cooling Program

Virginia customers of Dominion Power that use less than ten megawatts may be eligible for a rebate if installing a new heating and cooling system or upgrading an existing one. They report an average rebate of $1,650. Check their website to learn more or download a rebate form.

Dominion Virginia Power Non-Residential Heating & Cooling Program

In addition to heating and cooling rebates, Dominion Virginia Power provides an average rebate of $2,600 to business customers who upgrade or purchase energy-efficient lighting. The same requirements as the heating and cooling program apply.

WarmWise

Customers of Columbia Gas of Virginia are eligible for cash rebates on select equipment through their WarmWise program. Check out their available rebates for details about eligible equipment.

VA Solar Energy Equipment Tax Exemption

Businesses in Virginia are eligible for a partial exemption of local property taxes for certain solar equipment. The cities of Alexandria and Falls Church, as well as Fairfax County, participate in the program. For more information, contact the Virginia DEQ at 804.694.3222.

Maryland Energy Administration Programs

The Maryland Energy Administration offers over ten incentive programs to assist businesses with financial grants to upgrade and install various energy-efficient equipment. Their website includes a list of utility-sponsored rebate programs.

Energy efficiency is one of the largest issues in commercial building management. Even though the initial costs are high, the available grants combined with tax deductions and lower utility bills make your commercial building a profitable venture and a highly sought-after property for potential tenants.

If you’re looking for more great tips on how to maximize profit and minimize costs for your commercial properties, check out this article.

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