Commercial Building Tax Deduction 101 for Tenants and "Non-Commercial" Building Owners

Commercial Building Tax Deduction 101 for Tenants and "Non-Commercial" Building Owners

Through the Commercial Building Tax Deduction (CBTD), building owners have the opportunity to write off the complete cost of upgrading a building’s interior lighting, up to $0.60/sq. ft.  Given its title, one might think that the only people able to take advantage of the CBTD would commercial building owners.  However, public entities – that operate buildings such as government offices, schools, post offices, etc. – and building tenants may be eligible to take advantage of the CBTD as well.

Although public entities may not directly take advantage of the CBTD, the owner of government property may allocate the deduction to the person primarily responsible for designing the new system.  The designer is a person that creates the technical specifications; this may be an architect, engineer, contractor, environmental consultant, or energy services provider.  If there is more than one designer, the owner may elect to apportion the deduction to several designers.  The person installing, repairing, or maintaining the property is not considered the designer and thus not eligible for the deduction.  For more details, please review IRS Notice 2008-40 available on the enLIGHTen America website.

For building tenants looking to take advantage of the CBTD, they must review the terms of their lease and work with their landlord.  Whoever carries the lighting system as an asset on their books would most likely be considered the “owner” for tax purposes.  In some cases, tenants have elected to purchase a new lighting system with the consent of their landlord.  If the tenant is considered the “owner" and their new lighting system qualifies, they would be eligible for the CBTD.

For public entities looking to find out more details about how they can take advantage of the CBTD, NEMA’s enLIGHTen America campaign will be participating in the GovEnergy Workshop and Trade Show in Dallas, TX this August 15th through the 18th.

If you can’t make the trade show, please visit the enLIGHTen America website,, to learn more about the CBTD and the savings available through lighting upgrades.

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