What is Section 179D?
Section 179D, also known as the Energy-Efficient Commercial Building Property (EECBP) Tax Deduction, was enacted to encourage commercial building owners and primary designers to implement energy-efficient building components in newly constructed or existing commercial and government buildings. Section 179D enables commercial buildings owners to claim a tax deduction of up to $5 per square foot for improving the energy efficiency of new and existing buildings. To qualify, a building must meet or exceed key energy reduction requirements and ASHRAE standards.
179D Tax Deduction offers substantial benefits
For example, if the qualified building is 100,000 square feet, that could mean up to a $500,000 tax deduction for the work completed.
Who qualifies and what improvements are eligible?
Taxpayers and/or building owners who invest in new construction or in improvements to existing buildings are eligible. Primary designers – including architects, engineers, manufacturers, green building consultants, and contractors – of qualifying energy efficiency measures in buildings may also claim the deduction if they receive an allocation from their work completed on tax exempt entities.
Eligible tax-exempt entities may include:
Improvements must reduce energy use by making investments in any of the following categories:
- Building envelope (i.e. improvements to walls, floors, roofs, fenestrations, and doors)
- Heating, ventilation, and air conditioning (HVAC) systems
- Interior lighting systems
There are different ways to pursue a deduction and all require comparison to the ASHRAE Standards and certification by a qualified individual. To find out if you qualify, contact one of our experts for a free consultation.
Claiming periods
A 179D tax deduction can be filed for a project placed in service on and after January 1, 2006. Since the 179D deduction has been made permanent by the IRS, all current and future projects are eligible for the tax deduction.
Ayming’s 179D deduction process
Broadly, there are two parts to the 179D study process.
- Evaluation: Determine if the building qualifies for a 179D tax deduction. Conduct a comparison of the building to the reference model for energy efficient qualifications under ASHRAE. This requires an in-person visit to the building by a licensed qualified third party in the state.
- Documentation: There are two primary documents required for 179D tax deduction. Allocation letters confirming ownership of property and energy efficiency of the building that are signed by authorized personnel. Additionally, a report certifying the building qualifies for 179D and an energy model that shows energy reduction compared to ASHRAE standards.
Maximize your benefit by hiring an expert
We partner with your business and advisors to provide access to the maximum government energy incentives. Our team of experts take the time to understand your business in order to align your company to all available federal and state credits and/or grants. Our industry-based expertise and successful track record offer peace of mind knowing you have the highest chance of being approved and receiving the maximum benefit on investment possible.
