Go Green Environmental & Energy Conference

Financing & Incentives Session

Tax Advantages to Going Green

Presented by:

Joel E. Ackerman, CPA, MST

Wednesday, October 26, 2011

Did you know?

• Every year Americans use 4 Billion kWh to brew 30 billion pots of coffee.

• Office Buildings waste up to 1/3 of the energy consumed.

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The Importance of Reducing Energy Use

Outside the BoxMaking Envelope Tight

Architectural Design for Best Energy Use

Inside the BoxConservation & Efficiency

Building Management

Systems

Indoor Air Quality

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

Economics of Green Building

▶ Green buildings, energy efficiency in buildings comes at an increased cost

▶ Incentives help to offset that cost

▶ Federal Energy Efficiency tax deductions

▶ Federal Solar tax credits

▶ State Sustainability, LEED, solar and energy tax credits

▶ State exemptions from property tax, sales and use tax

▶ Utility incentives for solar, energy efficiency, LEED

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Depreciation

Depreciation is a tax deduction that goes right to the bottom line without any additional cash outlay.

Accelerated depreciation, bonus depreciation, and Section 179 provide significant deductions in the early years these improvements are placed in service

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Cost Segregation

A Cost Segregation Study is an approved tax and engineering approach to properly allocate a real estate holding for depreciation purposes.

Bottom line benefit: Increase property owner’s bottom line by reducing tax liabilities in the early years of owning or improving one’s real estate.

Energy Policy Act of 2005

Section 179D Enacted

• Congress passed legislation in August of 2005 to encourage property owners to build energy efficient real estate properties to promote reduction in energy consumption. Service dates were from 1/1/06 through 12/31/08.

• The Emergency Economic Stabilization Act of 2008 (HR-1424), approved and signed on October 3, 2008, extends the benefits of the Energy Policy Act of 2005 through December 31, 2013.

• The ruling allows up to a $1.80 per sq. ft. tax deduction for commercial property owners. Incentives were also allowed for contractors, site home builders and residential home owners.

Additional Incentives and Programs

Visit www.dsireusa.org for a clickable map and a listing of all federal and state incentives for energy retrofits

• Public Utility Rebates

• Insurance Savings

• State and Local Rebates

Quantifiable Results for Changes to Controls in 100,000 sq ft bldg

Low Est. Energy Savings %

Low Est.Cost Savings $

High Est. Energy Savings %

High Est.Cost Savings $

Adjust Temperature 1.1 2,384 2.9 6,285

After hours usage 0.7 1,517 1.5 3,251

Adjust ventilation 2.9 6,285 5.7 12,353

Limit access to thermostats 0.3 563 1.3 2,817

Optimize Start-up Times 0.6 1,300 2.9 6,285

Seasonal Changes to Thermostats 1.1 2,384 5.7 12,353

Coast Last Hour of Operation 0.6 1,300 2.9 6,285

CUMULATIVE EFFECT 7.3% $15,733 22.9% $49,629

Quantifiable Results for Changes to Lighting systems in 100,000 sq ft bldg

Low Est. Energy Savings %

Low Est.Cost Savings $

High Est. Energy Savings %

High Est.Cost Savings $

Change incandescents to CFLs 0.6 1,300 1.2 2,601

Convert T-12 to T-8 and T-5 3.5 7,585 9.7 21,022

Delamp 3.3 7,152 5.0 10,836

Full Floor Lighting Sweeps 0.5 997 1.4 3,034

Occupancy Sensors 0.3 672 3.2 6,935

High Efficiency LED Exits Signs 0.2 325 0.3 607

Timer Controls for Exterior Lights 0.7 1,582 2.9 6,285

CUMULATIVE EFFECT 9.1% $19,613 23.7% $51,320

A Dime For A Dollar?

The cost of Cost Segregation Studies and other

tax incentive products can lead to tax savings of

10-15 times the cost!

Thank You!

Any Questions?

Contact Info:

Joel E. Ackerman, CPA, MST

Director

200 Parkway Drive South

Suite 302

Hauppauge, NY 11788

Phone: 631-870-3920

jackerman@fuoco.com