As part of the budget appropriation legislation recently signed into law, the Tax Extender and Disaster Relief Act of 2019 extended the 179D deduction, among other deductions and credits.
What Is Section 179D?
179D is a section of the tax code that provides a deduction of up to $1.80 per square foot for energy efficient commercial building property (EECBP). Property qualified for the deduction includes interior lighting, the building envelope and mechanical systems. The deduction is now available through Dec. 31, 2020 for both privately owned and government-owned building properties.
Learn more about 179D and its impact.
Who Can Take Advantage of the Deduction?
The “designer” of government-owned EECBP is eligible for the deduction. A designer creates the technical specifications for installation of EECBP and could include architects, engineers, general contractors and subcontractors. However, a person that merely installs, repairs, or maintains the property is not a designer. If you were the designer for a government-owned facility placed in service in an open tax year (typically the last three), you could benefit from the Section 179D deduction.
A Recent Example
We worked with an architectural firm who designed EECBP for several government-owned buildings to obtain the Section 179D deduction, spanning the prior three tax years. A total of 799,000 square feet were analyzed, netting them a $872,400 deduction.
Who Can Take Advantage of the Section 179D Certification?
A qualifying EECBP placed in service between December 31, 2005, through December 31, 2020, could provide a benefit from the Section 179D deduction. The deduction is available for building owners as well as tenants who paid for the energy efficient commercial building property. The deduction is typically most beneficial for buildings that are 25,000 square feet or greater.
A Recent Example
We worked with a manufacturing company to obtain the Section 179D deduction. The manufacturing facility underwent an 183,000 square foot expansion, which included installation of both energy efficient HVAC and lighting. By gathering the necessary information and completing the certification, the client received over $325,000 in deductions on their current year tax return.
We can help you find the tax savings you deserve. Learn more in the link below or reach out to Joe Sawatske, Director of Energy Incentives, to get started.