Guest Post: Tax Credits & Deductions for LEED Energy-Efficient Building
Whether you are thinking about constructing a new building, you have already entered the planning and design stages for your building, or you are renovating a building, you understandably want to take a closer look at what it takes for your building to qualify for LEED certification. This is a special type of certification that may qualify your building for money-saving tax credits and deductions. By taking a closer look at what is required to earn this certification and what the deductions entail, you will be able to determine if this is a certification that you want to work toward with your design and construction efforts.
What the LEED Certification Means
The LEED certification is awarded by the U.S. Green Building Council, and this acronym means Leadership in Energy and Environmental Design. This is an internationally recognized certification that rates a building on numerous environmental factors. For example, factors related to energy efficiency, water usage efficiency, carbon dioxide emissions, indoor air quality and more are all measured and rated to determine if a property qualifies for this certification. The LEED certification is available for both new construction properties and significantly renovated properties.
A Points-Based System
Before you begin learning about the tax credits and deductions available for LEED-certified buildings, it is important to note that there are several levels of certifications for the LEED program. All buildings that have this certification must meet 18 points for standard pre-requisites. In addition, more points must be earned in different, flexible areas. A certified building will earn at least 45 total points. In addition, 60 points are required for silver certification, 75 points are required for gold certification and 90 points are required for platinum certification. The level of certification is not directly related to determining which tax credits are available for the property, but there is an important, indirect correlation.
The Tax Credits and Deductions
Homeowners, home builders and building owners may qualify for different types of tax credit and deductions based on some of the same factors that were required for the building’s LEED certification. The points-based system for the LEED certification can be complicated to understand, and this is because points are awarded to properties for different factors. These factors may qualify for different types of tax credits on their own, and the higher your property’s certification level is, the greater the tax benefits to you may be. For example, using exterior siding panels that have been constructed out of renewable resources may be beneficial to helping you earn points toward the LEED certification and can qualify the property for a tax deduction. Another common tax credit relates to energy efficiency of the lighting, heating and cooling systems and more. If the building is highly energy efficient in these areas, a tax credit of up to $1.80 per square foot may be issued to the property owner. These are only a few of the many tax credits and deductions available to you if you have an energy efficient property.
The Relationship Between the LEED Certification and Tax Credits and Deductions
If you are preparing to complete a major renovation or to construct a new building, you should be aware that you do not need to have the LEED certification to qualify for many of the tax credits and deductions. Likewise, you may not qualify for all of the tax credits and deductions available if you have an LEED certification. However, because the requirements for the LEED certification and the tax credits or deductions are so closely intertwined, it is wise for property owners or developers to be aware of the requirements for both. Savvy developers will design and construct a property that maximizes points toward the LEED certification while also maximizing the deductions and tax credits available.
Savvy property owners and builders alike should spend time learning more about the requirements in place for the LEED certification. Likewise, they should also spend time researching the tax credits and deductions available for energy efficient buildings. With a thorough understanding of each of these areas, property owners and builders will be able to make informed decisions that actively meet the requirements for both the certification and the tax benefits at the same time.
Jim Taylor has been an author and entrepreneur since 2008. He writes about small business, green technology and home DIY. He also develops real estate NY business websites.