179D is back! Congress recently extended the Section 179D Energy-Efficient Commercial Building Deduction through December 31, 2020, and retroactive for 2018 and 2019. It was previously effective for buildings placed in service through December 31, 2017.
Since 2005, Section 179D has provided a tax incentive for the installation of energy-efficient components into commercial buildings with respect to HVAC, building envelope, and interior lighting systems. The enhancements to these systems must surpass ASHRAE 2007 standards.
The deduction is available for newly constructed or energy upgraded commercial buildings, including apartment buildings four stories or more. Qualifying building owners and businesses can receive up to $1.80 per square foot of tax deductions for their energy-efficient buildings placed into service during all open tax years.
Architects, engineers or contractors that enhance the energy efficiency of a new government-owned building or make energy-saving renovations to existing government-owned buildings are also able to obtain the deduction. As government entities do not traditionally pay tax, the owners of these buildings can allocate the accrued tax savings to the business responsible for the energy-saving enhancements.
Government-owned buildings at the federal, state, or local level can potentially qualify for this special allocation rule. This would include airports, libraries, town halls, post offices, military bases, schools, state universities, transportation facilities, courthouses, government offices, institutions, and others.
At ADKF we are more than happy to assist you in exploring this and other tax incentives.