The Hotline Newsletter

Frequently Asked Questions - EPAct and Cambridge Heaters

EPAct

Q. What is EPAct?
A. The Energy Policy Act of 2005 (EPAct), pursuant to section 179D of the Internal Revenue Service (IRS) code, provides Federal tax deductions for making qualifying energy-reducing investments in commercial and industrial buildings. This applies to both new construction and existing buildings. The Economic Recovery Act of 2008 extended EPAct 2005 through December 31, 2013.

Q. What energy-saving measures qualify for EPAct?
A. Three major building sub-systems: (1) Lighting; (2) HVAC (heating, ventilation and air-conditioning); (3) Building Envelope (including roof, walls, windows, doors, the foundation and related insulation). The upgrades must have been placed in service after December 31, 2005, and before January 1, 2014.

Q. What is the maximum allowable tax deduction?
A. EPAct provides a maximum tax deduction of up to $1.80 per square foot for building investments that achieve specified energy cost reductions beyond ASHRAE 90.1-2001 building energy code standards. The $1.80 can be divided into individual deductions of up to $0.60 per square foot taken at different times for each of three types of building sub-systems: lighting, HVAC or the building envelope.

Q. Who gets the tax deduction?
A. Building owners or tenants who purchase and install the energy saving measures are eligible for EPAct tax deductions. For government buildings and non-profit organizations, EPAct allows the tax savings to be passed on to the company responsible for designing the building’s new energy efficient sub-systems.

Q. What is the process for getting EPAct tax deductions?
A. Have a qualified, independent engineered tax services firm provide Energy Tax 179D Certification for the IRS. The tax firm will do the appropriate energy modeling with IRS approved software and provide the required tax documentation.

Cambridge Heaters

Q. Do Cambridge heaters qualify for EPAct tax deductions?
A. Yes, Cambridge S-Series, Blow-Thru® Space Heating Systems have qualified for EPAct tax deductions when used in eligible buildings including warehouses, industrial plants, auto service areas, parking garages and other commercial/industrial facilities. This applies to buildings with large open spaces that have a heating/ventilating system but no air-conditioning. In other words, the types of buildings that use Cambridge space heating equipment.

Q. What does qualified mean?
A. Only Cambridge can provide energy modeling results from an independent consultant using building simulation software developed by the U.S. Department of Energy (DOE) and approved by the IRS. This third party documentation shows Cambridge direct-fired Blow-Thru space heating technology uses the least amount of energy to heat/ventilate warehouses and similar buildings as compared to other heating systems. Independent tax firms have used this information in conjunction with their own IRS approved software to provide Energy Tax 179D Certification that qualifies Cambridge heaters for EPAct tax deductions.

Q. What heating system expenses qualify for EPAct deductions?
A. The total expense to purchase, install and start-up a new Cambridge space heating system for a new or existing building qualifies as a tax deduction subject to the $0.60 per square foot cap. The cost to remove an old heating system from an existing building also qualifies as an eligible expense, making retrofit applications a very attractive investment.

Q. I was told I “should be able” to get an EPAct tax deduction for any high efficiency heating system. What’s so special about Cambridge heaters?
A. High efficiency heaters do not automatically qualify for EPAct tax deductions. Heating equipment qualified by an engineered tax services firm is something new. Cambridge has simplified the process for its direct-fired Blow-Thru space heating technology. It is the only type of heating/ventilating system that can provide independent energy modeling results using IRS approved software as a basis for pre-qualification. Cambridge is recommended by EPAct tax firms who guarantee the amount of your EPAct tax deduction.

Cambridge Heaters and Lighting

Q. Getting EPAct tax deductions for anything but lighting seems too complicated to make it worthwhile. Is this true?
A. No, Cambridge has in effect “connected the dots” to make the process straightforward and prescriptive. So, for Cambridge heaters, it is “just like lighting.”

Q. Why has everyone focused on EPAct deductions for lighting and not heating?
A. Building owners were encouraged to focus on lighting for two reasons: (1) ease and availability of upgrading and (2) documented energy cost savings. The EPAct process for lighting is now being expanded to buildings with Cambridge heaters for exactly the same two reasons. So now, just like for lighting, Cambridge heaters are an easy way to reduce energy costs and get big tax benefits.

Q. Can Cambridge heaters and energy efficient lighting be combined for EPAct?
A. Yes, when you combine a new Cambridge heating system with energy efficient lighting the maximum allowable EPAct tax deduction increases to $1.20 per square foot. Facilities that have already upgraded their lighting and received an EPAct tax deduction can still install a Cambridge heating system at a later date and receive an additional deduction for the heaters.

Q. Can Cambridge heaters, energy efficient lighting and building envelope improvements be combined for EPAct?
A. Yes, when you combine a new Cambridge heating system, energy efficient lighting and an energy efficient building envelope, the maximum allowable EPAct tax deduction increases to $1.80 per square foot.