Since its enactment under the Energy Policy Act of 2005 (“EPAct”), the §179D deduction has been a powerful tool for promoting sustainability while saving commercial building owners and primary designers thousands of dollars in taxes. However, this important incentive has never been a permanent part of the tax code and has traditionally expired at the end of each year. Most recently, the §179D deduction expired on December 31, 2016, sparking widespread uncertainty over whether Congress would act to renew it.
After months of speculation, the recently enacted Bipartisan Budget Act of 2018 renewed the §179D deduction retroactively for energy-efficient projects completed last year. Therefore, eligible taxpayers may now claim the deduction for projects completed through December 31, 2017. Although this renewal is short-term, Capital Review Group is pleased to announce that we have bolstered our resources for helping our clients claim this valuable incentive.
What is the §179D Deduction?
Section 179D of the tax code incentivizes energy efficiency measures in public and commercial buildings by providing a deduction of up to $1.80 per square foot. Specifically, the §179D deduction is worth up to $0.60 per square foot for improvements to lighting systems, $0.60 per square foot for the building envelope, and $0.60 per square foot for HVAC systems. This deduction is available to commercial building owners who install qualifying energy efficiency measures, as well as the primary designers—including architects, engineers, and contractors—of such measures in buildings owned by local, state, or federal governments.
Taxpayers may claim the $179D deduction for qualifying measures implemented in new buildings and retrofits to existing buildings. However, construction completed in 2016 or later must meet or exceed the standards enumerated in ASHRAE 90.1-2007. Energy-efficient building projects must also be certified by a qualified third party, such as CRG, to ensure that they satisfy all the requirements of §179D.
What’s Next for the §179D Deduction?
At this time, Congress has not taken action to extend the §179D deduction for 2018 or future years. Due to the deduction’s widespread popularity, however, future extensions are possible. In the meantime, commercial building owners and primary designers who completed energy efficiency projects in 2017 should act swiftly to seize this powerful incentive while it is available.
As CRG continues to expand our services in order to help our clients minimize their tax burdens, we are available to assist with certifying §179D projects and navigating the process of claiming the deduction. Contact the team of tax experts at CRG today by calling 877-666-5539 or visiting https://www.capitalreviewgroup.com/contact/!