Enacted as part of the Energy Policy Act of 2005, the Commercial Building Deduction, or the 179D Deduction as it’s often called, provides tax credits for business owners who construct or remodel their buildings to be energy efficient.
Going green in the 21st century pays, not only with these tax deductions, but in the money you’ll pay on future energy bills.
Here’s how it works: The incentive allows up to $1.80 per square foot of building floor area for buildings that achieve a 50 percent reduction in energy and power costs. The 179D tax deductions apply to a commercial building’s interior lighting systems, heating, cooling, ventilation, and hot water systems and the building envelope.
Find out if you qualify
What types of properties qualify?
- Property that qualifies as 39 year property under Revenue Procedure 87-56
- Residential Buildings of 4 Stories or more
- Government-owned buildings
- Parking Garages
- Renovations and retrofits of existing structures
Who can qualify?
- For-profit building owners
- Architects
- Engineers
- Contractors
Benefits Example
Timing
- Building owners – 179D deductions can be claimed for new construction or improvement projects placed in service after January 1, 2006 and was made permanent when the COVID relief bill and fiscal year 2021 omnibus spending package was signed on December 27th, 2020.
- Designers/contractors of government-owned buildings – 179D deductions are available during “open years” (generally 3 years from the date of filing).
Let CSG Strategic Tax Consultants navigate the process and the tax laws to assess your qualifications and save you money.