Get a tax deduction
for energy efficiency
The Energy Efficient Commercial Building Tax Deduction, IRS 179D, also called EPACT, was designed to reward owners of commercial buildings who now must comply with higher energy efficiency standards.
Section 179D allows up to $1.80 per square foot in deductions to those who have upgraded their building’s lighting, HVAC, or building envelope. You can take the Section 179D deduction if you are:
- Owners of energy efficient commercial or multifamily properties built or retrofitted since 12/31/2005.
- Architects, engineers, ESCOs, and designers of energy efficient municipal building projects. (LEED certified buildings easily qualify.)
The 179D deduction provides a one-time accelerated depreciation for commercial, multifamily, and public agency-owned facilities. This benefit, which is vastly misunderstood and underused by most building owners, provides a significant reduction in taxes for those who have retrofitted their buildings with energy efficiency upgrades.
To qualify for the Section 179D tax deduction, the IRS requires an independent, third party energy tax study.
Architects and construction companies that have designed energy efficient buildings for public agencies are also eligible.
Section 179D Details
The Energy Policy Act of 2005 enacted Internal Revenue Code Section 179D. The Energy Efficient Commercial Building Deduction, originally created as part of the EPAct of 2005, is usually known simply as Section 179D. The federal tax deduction is calculated based on the energy efficiency of a commercial building, as compared to a 2001 benchmark ASHRAE 90.1-2001.
The maximum deduction is $1.80 per square foot; however, within this deduction there are three potential subsystem deductions:
- HVAC: $0.60 per square foot
- Interior Lighting: $0.60 per square foot
- Building envelope: $0.60 per square foot
Energy efficient buildings that qualify for substantial tax deductions related to lighting, HVAC, and the building envelope through Section 179D include structures of more than 20,000 square feet that have been put in service between December 31, 2005 and December 31, 2016 and are:
- New commercial and municipal buildings
- Retrofitted buildings
- LEED buildings
The total federal tax deduction available is $1.80 per square foot for any newly constructed or retrofitted commercial buildings that meet an energy efficiency threshold as outlined by the DOE and IRS; i.e., a building that achieves a 50 percent reduction in total annual energy and power costs through the above three subsystems.
Call 925-989-7117 for a free
179D deduction review!
The professionals at Sustainable Energy Associates make the 179D deduction simple. We offer a complete turnkey solution—documentation and certification—to building owners and architects who want to take advantage of a major tax deduction they deserve. Increase your ROI and decrease your tax liability with a 179D certification for your energy efficient facility.
We have helped clients earn over $5 million in deductions just in the last two years. Join them today by calling 925-989-7117 or by using this short form.
As a mechanical engineering firm, SEA has facility experts and engineers who do energy modeling and 179D certification. In the last two years alone, we have helped our clients earn over $5 million in deductions.
Recent 179D projects include:
Remodeled supermarket of 55,000 sq. ft.
Upgrades included energy efficient lighting, and premium EER HVAC system. Facility qualified for $1.20 sq. ft. or a deduction of $66,000.
Newly constructed luxury hotel of 680,000 sq. ft.
Building envelope included increased wall and ceiling insulation, cool roof, radiant barrier construction, and peak load management capability; energy efficient lighting included LEDs, CFLs, T5s in work areas, stairwell sensors; premium efficient HVAC equipment, and variable speed drives on pumps, and EMS. Facility qualified for $1.80 sq. ft. or $1,224,000 deduction.
Newly constructed university dormitory of
200,00 sq. ft.
Facility was LEED Gold, and qualified for $1.80 sq. ft or a deduction of $360,000. SEA facilitated the deduction transfer from the publicly owned university to the architect, who received the deduction.
Attention Designers & Design-Builders. SEA can help you receive the 179D allocation from public agency-owned facilities.
"Sustainable Energy Associates did an excellent job in certifying the Energy Efficiency Commercial Building Tax Deduction, 179D for Ganau America’s new building. The people at Sustainable Energy Associates are easy to work with, knowledgeable, and thorough. As a result, they were able to determine a higher level of deduction than originally estimated." Mariella Ganau, President