179D Energy Efficient Commercial Building Deduction
Accelerate Your Depreciation & Reduce Tax Liability
Section 179D of the Internal Revenue Code (IRC) is an engineered based tax incentive available for the reduction of energy and power costs in commercial buildings. The tax provision was initially enacted under the 2005 Energy Policy Act (EPACT) and allows for a tax deduction of up to $1.80 per square foot.
See If Your Building Qualifies
Who Can Benefit from 179D?
The section 179D tax incentive was developed with a technology neutral approach. In general, new construction as well as retrofits with improvements made in a building’s lighting, HVAC, or envelope systems which reduce energy consumption can qualify.
Qualifying Properties Include:
- Commercial Buildings of any type.
- Residential Buildings of 4 Stories or more.
- Parking Garages.
- Government-owned buildings.
Who Can Claim the Deduction?
- For-profit owners of commercial buildings.
- For-profit owners of Apartment Buildings (4 or more stories).
- Designers of Government Buildings (Architects, Engineers, ESCOs, Energy Consultants).
Designers & Contractors of Government Buildings
Governments are non-taxable entities and are unable to benefit from the section 179D tax incentive. Because of this, the IRS established guidance allowing governments to allocate the deduction to the parties involved in the design of the energy efficient systems.
If your company has been involved in the design, construction or retrofit of government owned buildings in the last 4 years, there may be some great opportunities for you to benefit from the 179D tax deduction.
Qualifying Requirements & Savings
Section 179D requires the taxpayers building to meet or exceed a 50% savings in energy and power costs when compared to a theoretical ASHRAE baseline building. If the target of 50% savings is met, the building will qualify for $1.80/SF.
For buildings which do not meet the 50% savings, the tax provision also allows for partially qualifying systems:
- $0.60/SF for HVAC systems meeting 15% savings.
- $0.60/SF for Lighting systems meeting 25% savings.
- $0.60/SF for Building Envelope systems meeting 10% savings.
About Our Streamlined Process
ABIS strives to create a streamlined and transparent process to ensure our clients can maximize their benefits with minimal internal costs and efforts. Our typical time frame for a full 179D Study is 4-6 weeks.
- Initial Consultation: An in-depth evaluation of your company’s potential.
- Feasibility Study: Our engineering team will pre-qualify your project.
- Notice to Proceed: You authorize us to perform the energy and certification study.
- Engineering and Inspection: We commence with the IRS required Engineering Analysis and Site Inspection.
- Review and Delivery: We provide the final report for you and your tax professional.
Best of all, ABIS provides full audit defense without limits for all certifications performed.