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Cotocon EPAct Energy Tax Incentives Presentation


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Incentives and Rebates come in all sorts of form.

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Cotocon EPAct Energy Tax Incentives Presentation

  1. 1. ENERGY TAX INCENTIVES And How They Can Benefit You… The Cotocon Group Tel: 888-98-COTOCON(26862)
  2. 2. The Learning Objectives • Understand how Energy Policy Act (EPAct) 179D works to claim substantial benefits for energy efficient design, construction and renovation of commercial buildings placed in service between the years 2006 and 2013. • Learn how Private Building benefit Owners and Tenants and why management companies, architects, engineers energy consultants should also be aware of this policy. • Learn how Public Buildings benefit Architects, Engineers and Contractors as the “Designer” of new construction, additions or renovations. • Turn your knowledge and application of EPAct 179D into a new Competitive Advantage and niche Business Development Strategy. • Additional tax savings and other strategies like Cost Segregation and “DEIRA” Insurance Replacement Appraisals. • How to find additional savings through State, Local, Municipal and Local Utility Rebates.
  3. 3. About Cotocon’s Tax Services • The COTOCON Team is a licensed Engineering Firm with niche Accounting and Tax expertise with offices on the East Coast of the United States • The COTOCON Team averages $10 million in monthly refunds and tax benefits for real estate clients (50+ studies per month!) • The COTOCON Team averages $1 million in monthly refunds and tax benefits for architects, engineering firms, contractors and other firms involved in Public Building projects • Clients include Google, Hilton, Marriott, Disney, Boeing, Ford, BMW, Outback • Partners with AIA, USGBC, Energy Star, DOE, ASHRAE, ConEdison, NYSERDA
  4. 4. Energy Policy Act of 2005 • Congress passed legislation in August of 2005 to encourage property owners to build energy efficient properties to promote reduction in energy consumption. Service dates were from 1/1/06 through 12/31/08. • The Economic Recovery and Stabilization Act of 2008 (HR- 1424), approved and signed on October 3, 2008, extends the benefits of the Energy Policy Act of 2005 through 2013. • The 179D ruling allows up to a $1.80 per sq. ft. tax deduction for commercial property owners and tenants … Incentives were also allowed for contractors, site home builders and residential home owners.  Note: You can go back 4 years and carry forward the unused 179D energy tax benefit for 15 years.  Important: CASH Refunds may be due to you!
  5. 5. Recap: EPAct 179D For Commercial Buildings 2006-2013 (New Buildings & Renovations) - Private Buildings (Benefits - Owner / Tenant) - Public Buildings (Benefits - Architect/ Engineer / Contractor) - Lighting | HVAC | Envelope (Roof / Windows / Insulation) $.60 $.60 $.60 = $1.80 per SF $100k SF = $180,000 - Model vs. ASHRAE 2001 90.1 (16 2/3% Improvement) - Business Development Strategy (Value-Added Info)
  6. 6. Attention: Architects, Engineers & Contractors For energy-efficient commercial building improvements (New Build or Renovations) made by a Public or Government Entity ... Examples: Schools K-12, Colleges, Universities, Civil, Municipal, Government, Jails, Military Buildings, etc. … the IRS now allows the deduction to be allocated to the “person primarily” responsible for designing the property and systems in lieu of the public entity.  Did you read your AIA Journals?  Did your Accountant tell you about this?
  7. 7. Goal: Reduce Energy Use In the US alone … Buildings Account for: • 72% of electricity consumption • 39% of energy use • 38% of all carbon dioxide (CO2) emissions • 40% of raw materials • 30% of waste output (136 million tons annually) • 14% of potable water consumption
  8. 8. Who Benefits? • Owners or Tenants who pay for new or improved energy-efficient commercial buildings since 2006 through 2013 • Designers of energy-efficient properties installed in publicly-owned buildings. • Homeowners • Building and Real Estate Communities all indirectly benefit.
  9. 9. Why Is the Energy Tax Benefit Not Used? • Less than 1% of eligible taxpayers have filed for their energy tax benefits with the IRS. • Millions of taxpayers are due significant benefits and possible refunds since 2006. • Why are taxpayers missing significant energy tax benefits and incentives?  Low Awareness – No one was interested in the “good” times.  Requires Qualified Engineer with Qualified DOE Software  Requires Tax Paperwork – 179D Deduction
  10. 10. Ideal Candidates for 179D • New Construction: Schools, Office, Retail, Hospitality, Industrial, Multi-Family • Renovations & Retrofits: Improvements to Lighting, HVAC, Envelope (roof , insulation, windows), Energy Performance Contracting, CRA Redevelopment • Green & LEED Certified Buildings
  11. 11. Case Studies: 179D Energy Tax Benefits
  12. 12. Case Study: Nissan Dealership • $35,000+ 179D Energy Tax Deduction • $640,000+ Additional Cost Segregation Tax Benefit
  13. 13. $1,391,089 Energy Tax Deduction for IKEA • IKEA Brooklyn, NY Project Area: 346,638 SF Qualified for $.60 per SF 179D Tax Benefit $207,983 • Cost Segregation Study Five Year Cash Benefit: $16,975,757 $1,183,105.80 Energy Tax Credits CLAIMED for 5 additional IKEA Locations. • Five year cash benefit from 3 Additional CSS = $8,301,688 • Total Five Year Cash Benefit for 4 buildings = $25,277,445
  14. 14. $117,666 Tax Benefit Claimed by the Private Building Owner • Republic Services • LEED Silver • 65,370 square feet • Completed Fall 2008
  15. 15. Two Ways To Qualify Under 179D 1st - Using the “Whole Building Approach” Get the full $1.80 per square foot if the building reduces total annual combined energy use by at least 50% compared to similar building based on ASHRAE 90.1 2001 energy guidelines
  16. 16. 2nd - Qualifying Partial Building Systems • Interior Lighting systems up to $.60 per sf • HVAC (Heating, Cooling, Ventilation & Hot Water systems) up to $.60 per sf • Building Envelope (Roof, Insulation, Windows) up to $.60 per sf
  17. 17. • Lighting accounts for almost 40% of commercial electrical consumption • 100 Billion square feet of commercial space nationwide. (Nearly all requires lighting … Parking Garages!) • Less than 3% of eligible facilities have claimed EPAct 179D Deductions • New energy-efficient lighting can save building owners as much as 50% on their electric bills and payback in two years or less • Any building with a lighting system 10 years or older is using old technology • In addition to reduction in operating expense, new lighting improves lighting quality, increases the asset value and marketability of the building The Lighting Opportunity
  18. 18. Relamp Case Study Industry: Packaging Manufacturer Building Size: 115,000 SF. Actions: Replace (148) 400W MH and (44) 190W T12 with (180) 220W T5 HO Fixtures Project Cost: $35,000 Energy Savings: $11,000 per year Rebates and Incentive: $20,000 Environmental Savings: Prevents emission of 147 tons of greenhouse gases
  19. 19. BUILDING ENVELOPE • Roofs, Walls & Insulation • Climate Considerations • Doors, Windows & Openings • Thermal Efficiency • Reflectivity • Moisture Buildup
  20. 20. 1st Step … Feasibility Analysis • Review basic building info including location, SF, year completed, scope of work, what systems (Lighting / HVAC / Building Envelope) • Prepare (complementary) Cost Benefit Analysis for each building or portfolio of buildings for client to review • Average COTOCON fee is $.05 - $.15 per sf • Average client benefit is $1.20 per sf • Agree on Engagement strategy, COTOCON collects building plans and specs from client • Cotocon completes review, energy modeling and benefit calculation • Cotocon schedules site visit as required by IRS • Complete process takes 30-45 days
  21. 21. CERTIFICATION MUST INCLUDE: • Statement regarding the energy efficiency of the building (Lighting, HVAC and/or hot water system, Envelope) • Statement that the reduction has been determined under the Rules of Notice 2006-52 • Statement that field inspections have been performed verifying the energy-saving assets • Statement that approved software has used for calculations • A list of qualifying assets and projected annual energy costs • Completed by a Qualified, Independent 3rd Party - Properly licensed engineer with accounting and IRS experience - Not a related Individual or Entity - Written statement of qualification to taxpayer - The qualified firm’s (TCG) name, address and phone number IRS GUIDELINES FOR 179D
  22. 22. Additional Federal Incentives • Fuel Cells = 30% Credit • Stationary Micro Turbines • Power Plants = 10% Credit • Solar Equipment = 30% Credit
  23. 23. State Incentives Can Be Equal or Greater Than Federal Incentives Federal Benefits Not Exclusive • Important to know that new energy incentives are coming online everyday. • In addition to Federal incentives, many States also have matching credits as well. • Also, utility companies have incentives related to energy assets. • Important to look at ALL incentives: State, Federal, Local Government and Utility Companies
  24. 24. Additional Incentives & Programs • Public Utility Rebates • Insurance Savings • State and Local Rebates Visit for clickable map and a listing of all Federal, State and Local incentives for energy improvements
  25. 25. Recap: EPAct 179D For Commercial Buildings 2006-2013 (New Buildings & Renovations) - Private Buildings (Benefits - Owner / Tenant) - Public Buildings (Benefits - Architect/ Engineer / Contractor) - Lighting | HVAC | Envelope (Roof / Windows / Insulation) $.60 $.60 $.60 = $1.80 per SF $100k SF = $180,000 - Model vs. ASHRAE 2001 90.1 (16 2/3% Improvement) - Business Development Strategy (Value-Added Info)
  26. 26. About Cotocon’s Tax Services TCG marries the science of engineering with the principles of tax and accounting utilizing innovative financial strategies resulting in increased cash flow, minimized tax payments and increased ROI. These IRS approved services include Cost Segregation Studies, Energy Tax Credits, 179D Deductions and Historical and Brownfield Development Credits. The Cotocon Team Tel: 888-98-COTOCON(26862)