By Margaret A. Moore
In today’s economic climate, does it make sense to invest in your self-storage buildings by making “green” improvements? Potential savings on energy costs over time make the idea of spending now more attractive, though it’s hard to project exactly what your future savings will be.
However, there’s another reason to make energy-efficient improvements to your self-storage facility. Thanks to §179D of the Energy Policy Act of 2005, building owners may be eligible for tax deductions for implementing energy-efficiency components in commercial buildings, including self-storage. These deductions are applicable to buildings that were either built or retrofitted after Dec. 31, 2005, and must be certified by a qualified third party.
While the building envelope is a great place to start when considering energy-efficiency improvements that qualify under §179D, it can also be tricky. Qualifying improvements to the building envelope entitle taxpayers to $.60 per square foot. The recent issuance of Revenue Procedure 2011-14 will allow some taxpayers to claim this deduction all the way back to Jan. 1, 2006, without filing one single amended income-tax return. This means a taxpayer could “catch up” by potentially claiming deductions from 2006-2010 (or 2011) all on one return and significantly reducing his tax burden, if not eliminate it altogether.
Regulating Air Flow
With energy savings and §179D deductions as incentives, building owners and tenants can look at various improvements to the building envelope to discover maximum benefits. Most self-storage facilities are of one of two types—a multi-story building that usually has some type of ventilation or even HVAC, or a single-story, garage-type with individual doors on each unit. This second type usually has no HVAC system. For the multi-story building, air-barrier systems are designed to block unwanted air movement through the building envelope and may be an option.
According to the U.S. Department of Energy, air leakage through the building envelope is responsible for up to 40 percent of heating and cooling energy costs. An air-barrier system can have a major impact on the energy consumption in the building, as well as potentially qualifying for the §179D deduction.
Typically, multi-story storage facilities have few windows, and single-story buildings relegate windows to the office area. Window glazing or tinting is another viable alternative to qualify for the §179D deduction, as well as saving on future energy costs. Low emissivity (Low-E) coating on glazing or glass windows controls heat transfer, usually resulting in a 30 percent to 50 percent reduction in energy loss.
According to the U.S. Department of Energy, Low-E coatings can be applied to the outside pane of glass to reduce heat coming into the building, and applied to the inside pane of glass to help retain heat in the building in colder climates. Some Low-E coatings can be applied to existing windows as retrofits, which is a fairly inexpensive way to not only save on energy consumption, but also potentially qualify for the §179D deduction.