Energy tax expert details US incentives.

An expert on federal energy tax incentives told an open forum sponsored by the Building Owners and Managers Association (BOMA) Long Island that building owners or tenants who make use of a new law aimed at reducing energy consumption can reap huge tax deductions.

The expert, Charles R. Goulding, President of Syosset-based Energy Tax Savers Inc, speaking at a Feb. 8 BOMA Long Island meeting, said the Energy Policy Act of 2005 provides tax deductions for reducing building energy use through upgrades in lighting, lighting controls, HVAC, and the building envelope.

"The law is designed to push leading buildings to higher energy efficiency," Goulding said, noting that the law provides dollar for dollar tax deductions that in effect accelerate depreciation of energy-related improvements. Ordinarily, he noted, improvements, say to an HVAC system, are depreciated over 39 years.

In addition to commercial buildings, the law covers residential rental properties that are four stories or more. The 2005 law provides immediate tax deductions for projects undertaking in 2006, 2007 and 2008 and that pending legislation, which has a good chance for approval, will extend the breaks until 2012 or 2014, Goulding said. He noted that Rep. Charles Rangel (D-NY) is pushing for the extension.

"This tax law in unique," he said, because it is based on ASHRAE standards rather than Internal Revenue Service definition.

Gould said it was unlikely deductions could be obtained for a whole building. He said there are only about 200 buildings nationally that might qualify for the breaks, including three projects in Manhattan, the Bank of America, Hearst and IAC Interactive towers along with some smaller projects in Southampton.

The goal of the measure, which became effective last year, is to have zero energy buildings. But, Goulding noted, "It's hard to get energy reductions."

The tax breaks, he said, are designed for energy savings, not for reducing construction costs. "These buildings require long cycle investments," he said.

"Lighting is the low hanging fruit," Goulding told the BOMA meeting and noted that Kohl's, the big retail chain, will reap a $24 million tax deduction and save $8 million by changing the lighting in 40 million square feet of space it owns.

On Long Island, Goulding said, his firm is assisting 70 projects many of them about 40,000 square feet, which provided a deduction of $24,000 and a savings of $8,000. "The bigger your building, the bigger the tax deduction."

He added that for government buildings, the tax break is passed on to architects and engineers.

The forum was held in the auditorium of 68 S. Service Rd., Melville and was free for BOMA members and members of the Long Island real estate industry. BOMA Long Island's next event on March 8, also at 68 S. Service Rd., Melville, will be a members-only discussion of emergency preparedness.