By Matthew Becker
Jan. 28, 2010
Green incentives were arguably the most significant group of tax credits and deductions for businesses this past year. Companies that took steps to “go green” were eligible for up to four different sources of savings - with tax incentives being offered from the federal, state and local governments, plus the added bonus of utility savings. With a new year comes new incentives that business owners can take advantage of to green both their wallet and the environment in 2010.
Install New Lighting, Building Insulation or Heating Cooling Systems
This is an easy way to make your business eligible for the Energy Efficient Commercial Building Deduction. If you have already installed these fixtures, all you have to do is note the deductions on your tax forms. You can deduct up to $1.80 per square foot of the building where the energy efficient upgrades were made. This breaks down to 60 cents each for energy efficient lighting, heating/cooling systems (HVAC) or building envelope. So even if you’ve only done one or two, you’ll be eligible for a portion of the deduction. Business owners have plenty of time to complete an installation project and once implemented, the business will be eligible for the deduction during the 2010 tax year, as it must not be taken earlier than the year placed in service.
Purchase New Space for Your Business
If you are planning to develop or purchase any new space for you business, including warehouse or parking lot space, businesses can consider how to make that purchase work for them. New developments such as parking lots or warehouses are prime opportunities for significant energy tax savings, especially related to lighting - which can save not only through tax credits but also in lower utility costs. Make sure your accountant is coordinating closely with your construction team so that all tax-related cost savings can be flagged ahead of time.
Take Advantage of Federal, State and Local Incentives
Companies that are taking steps to go green may be eligible for three bites of the apple when it comes to tax savings. Make sure you are aware of all the incentives offered at federal, state and local levels, and eligibility requirements both at time of implementation and tax filing to avoid mistakes. Keep in mind that some of these incentives may overlap and cannot be taken in conjunction with each other, so consult with your accountant to ensure you are aware and benefiting from the various incentives offered.
In summary, it is likely that tax incentives and deductions will continue to be announced at the various levels of government. For many companies, it is in their best interest to keep in touch with their accountants and always keep an eye towards changes and requirements to take full advantage.
Matthew Becker is the head of the Green Energy Tax Practice at BDO - the fifth largest accounting and consulting organization in the world. Becker is leading the firm’s charge on sustainable building and the tax incentives surrounding it. He works out of BDO’s Grand Rapids, Mich. office.