If you are the owner of a commercial building, or were involved in the design or construction of a government owned building, you may qualify for tax deductions of up to $1.80 per square foot for energy-efficiency improvements.
What the EPAct 179D means for you:
- Potential for immediate tax benefits in-lieu of depreciation. Building owners are not required to file amended tax returns for previous projects.
- Deductions of up to $1.80/sq ft for installation of, or improvements to energy-efficient lighting, HVAC, or building envelope.
- Deductions also available in smaller increments of $1.20 or $0.60 per sq ft
- From 2021 deductions to increase in line with inflation
- EPAct 179D used to be temporary and subject to annual renewal, however the Covid Relief Bill of 2021 made it permanent.
Which properties qualify?
Both new constructions and renovations placed in service between January 1st 2006 and Dec 1st 2020, including:
- Commercial buildings of any size
- Residential rental apartments of at least 4 stories
- All government buildings
- Energy efficient lighting (LEDs, compact fluorescents)
- Specialized HVAC (geothermal, thermal storage, CHP, chillers, chilled beam, VAV, VFD, etc.)
- Warehouse/industrial buildings with HVAC throughout – easy to qualify for $1.80 deduction
You may qualify for 179D tax savings under the following circumstances:
- You are a commercial building owner
- You are a commercial tenant who owns depreciating assets such as HVAC or lighting
- You were the designer, engineer, or architect of a government or municipal building
- Projects completed from 2006-2015: Must be more efficient than ASHRAE 90.1.2001 standard by specified thresholds
- Projects completed from 2016-2020: Must be more efficient than ASHRAE 90.1.2007 standard by specified thresholds
- Projects completed after 2020: Must be more efficient than ASHRAE standard in place two years before construction began