Sec. 5034. Energy efficiency deduction for existing commercial buildings
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Part VI of subchapter B of chapter 1 is amended by inserting after section 179E the following new section: There shall be allowed as a deduction an amount equal to the lesser of— the applicable amount for the qualified building based on energy efficiency improvements made by the taxpayer and placed in service during the taxable year, or 30 percent of the amount paid or incurred by the taxpayer for energy efficiency improvements made to the qualified building which were placed in service during the taxable year.
For purposes of subsection (a), the applicable amount shall be an amount equal to the product of— the applicable dollar value, and the square footage of the qualified building. For purposes of paragraph (1), the applicable dollar value shall be an amount equal to $1.25 increased (but not above $9.25) by $0.50 for every 5 percentage points by which the efficiency ratio for the qualified building is certified to be greater than 20 percent. For purposes of this section, the efficiency ratio of a qualified building shall be equal to the quotient, expressed as a percentage, obtained by dividing— an amount equal to the difference between— the projected annual level of energy consumption of the qualified building after the energy efficiency improvements have been placed in service, and the annual level of energy consumption of such qualified building prior to the energy efficiency improvements being placed in service, by the annual level of energy consumption described in subparagraph (A)(ii).
For purposes of paragraph (3)(A), the determination of the difference in annual levels of energy consumption of the qualified building shall not include any reduction in net energy consumption related to qualified property or energy storage property for which a credit was allowed under section 48E. The term qualified building means a building— located in the United States, which is owned by the taxpayer, and which is certified to have— a projected annual level of energy consumption after the energy efficiency improvements have been placed in service that is less than the annual level of energy consumption prior to the energy efficiency improvements being placed in service, and an efficiency ratio of not less than 20 percent.
The term energy efficiency improvements means any property installed on or in a qualified building which has been certified to reduce the level of energy consumption for such building or to increase onsite generation of electricity, provided that depreciation (or amortization in lieu of depreciation) is allowable with respect to such property. For purposes of subsection (a)(2), the amount paid or incurred by the taxpayer— shall include expenditures for design and for labor costs properly allocable to the onsite preparation, assembly, or original installation of the property, and shall not include any expenditures related to expansion of the building envelope.
A certification described in this section shall be made— in accordance with guidance prescribed by, and by a third-party that is accredited by a certification program approved by, the Secretary, in consultation with the Secretary of Energy. Such guidance shall specify procedures and methods for calculating annual energy consumption levels, with such calculations to take into account onsite generation of electricity or useful thermal energy, and shall include requirements to ensure the safe operation of energy efficiency improvements and that all improvements are installed according to the applicable standards of such certification program.
Any calculation under paragraph
(1)shall be prepared by qualified computer software. For purposes of this paragraph, the term qualified computer software has the same meaning given such term under section 179D(f)(2). In the case of a qualified building owned by an eligible entity, the Secretary shall promulgate regulations to allow the allocation of the deduction to the person primarily responsible for designing the energy efficiency improvements in lieu of the owner of such property, with such person to be treated as the taxpayer for purposes of this section. For purposes of this subsection, the term eligible entity has the same meaning given such term under section 179D(d)(2). For purposes of this subtitle, if a deduction is allowed under this section with respect to any energy efficiency improvements, the basis of such property shall be reduced by the amount of the deduction so allowed. For purposes of this section, expenditures taken into account under section 47 or 48E shall not be taken into account under this section. . Section 263(a) is amended— in subparagraph (K), by striking or at the end, in subparagraph (L), by striking the period and inserting , or , and by inserting at the end the following new subparagraph: expenditures for which a deduction is allowed under section 179F. . Section 312(k)(3)(B) is amended— in the heading, by striking and inserting or 179E , and 179E, or 179F by striking or 179E and inserting 179E, or 179F . Section 1016(a) is amended— in paragraph (36), by striking and at the end, in paragraph (37), by striking the period at the end and inserting , and , and by inserting at the end the following new paragraph: to the extent provided in section 179D(f). . Section 1245(a) is amended— in paragraph (2)(C), by inserting 179F, after 179E, , and in paragraph (3)(C), by inserting 179F, after 179E, . The table of sections for part VI of subchapter B of chapter 1 is amended by inserting after the item relating to section 179E the following new item: Sec. 179F. Deduction for energy efficiency improvements to commercial buildings. . The amendments made by this section shall apply to any energy efficiency improvements placed in service after December 31, 2017.