179D Tax Deduction – Energy & Efficiency Study Services

179D Tax Deduction = Tax Benefits for Commercial & Residential Properties

Our clients have a keen interest in the tax benefits that can be derived from §179D of the Energy Policy Act of 2005 (EPAct). Section 179D allows for immediate deduction for energy-efficient commercial property up to a maximum of $1.80 per square foot. Even better, this deduction can pass on to architects and designers who design efficient government buildings.

179D tax deductions

What is the 179D Tax Deduction?

A brilliant deduction, but you need to qualify.

Of course, it’s not as easy as simply claiming that your building is energy efficient and then paying a lower tax bill—there are strict requirements to meet. The improvements in question must fall under certain categories.

§179D specifically looks at three areas of the building:

A qualified building must be certified by an independent, qualified organization such as MS Consultants.

What is the §45L Tax Credit?

What is the §45L Tax Credit?

Often Overlooked Tax Benefits for Residential Properties

Formally codified as Energy Efficient Home Credit IRC §45L, this provision can provide major savings for real estate owners—particularly those owning certain apartment buildings and other larger residential buildings.

In order to qualify for the §45L credit, a residence has to meet four major conditions:

Do you qualify for the 45L Credit?

One of the exciting aspects of §45L is that, thanks to modern building techniques and materials, the majority of residences built in recent years meet the energy efficiency requirements—often regardless of whether they were built with the intention of being “green.” This is not to say that every recent construction will automatically qualify, but don’t discount the possibility that your property may qualify simply because you didn’t concentrate on energy efficiency. If your building followed current best practices, there’s a good chance you’ll see some tax savings.

What are the benefits? Let’s do the math.

Assuming a dwelling meets all of the above conditions, the savings can be substantial. To demonstrate, let’s look at an example. Let’s say your company constructed a condominium complex in New York State that was completed just a few years ago. The structure has 500 units, and between completion of construction and today, all of the units are occupied. The structure was built following best practices and falls under the IRS’ definition of energy efficient.

You fulfill all of the requirements for each of the units, so with a little simple math: 500 units times $2,000 is $1,000,000. The depreciable basis of the condominium would be reduced by $1,000,000—without any extra work on your part.

It’s worth noting that to realize this credit, a taxpayer’s property must be in-service and claimed in the current or any open tax year.

Let’s Get Started.

Contact us today to find out how we capture extraordinary tax benefits for all types of entities.