I understand that the IRS has issued “permanent” rules for partial deductions. What are they?
An entire building, new or renovated, has to be compared to a reference building of the same type in the same climate, using approved software. The whole building has to be modeled and a baseline energy usage calculated as if it were following ASHREA/IESNA 90.1-2001 power density allowances. The total power allowance is calculated based on three systems: interior lighting, HVAC/hot water and building envelope. The target for the whole building is a 50% savings. Any one of the three systems must save 1/3 of the 50%, or 16-2/3% or more of the total building power allowance. The bi-level switching requirement appears to have been dropped from the “permanent” rules for partial deductions. Note that if these rules are followed, approved software must be used. In the case of lighting, there are two options for taking a partial deduction: the “permanent” rules for partial deduction or the interim rules with the sliding scale.
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