Tax Incentives for Energy Efficient Building Projects
Section 179D Studies
Through Section 179D studies, companies are now able to receive tax deductions for integrating energy saving features into their plans for building remodels and new construction.
You can receive tax savings for doing your part to reduce energy consumption. Substantial deductions are now available to commercial property owners and government building designers who integrate energy saving features into their plans for new construction and building remodels.
To help companies take full advantage of this opportunity, EisnerAmper offers studies performed by engineers who determine what level of deduction a project qualifies for, as well as who gets the credit. Our team has the engineering skills to evaluate your project and uncover whatever tax savings are available.
- What is Section 179D?
Section 179D was originally enacted in the Energy Policy Act of 2005, and provides a deduction for qualifying commercial and government building projects. The purpose is to incentivize designers and commercial building owners to make use of energy efficient options for lighting, HVAC and building envelope.
- Who can use it?
New construction and existing building upgrades are both eligible. In addition, tenant-owned lease-hold improvements and primary designers of government buildings qualify. Retailers, distribution centers, hotels, parking garages, industrial facilities and office buildings have been some of the earliest adopters. With the emphasis on energy efficiency and infrastructure products built into the recent stimulus package, the opportunities to get the credit have only increased.
- What is the benefit?
The maximum benefit you can take is $1.80/sq. ft., which is broken down into a maximum $0.60 deduction for the building envelope, a maximum $0.60 deduction for the HVAC and a maximum $0.60 deduction for the lighting. For example, if you were able to take the maximum deduction on a 100,000 sq. ft. building, your deduction would be $180,000.
- Who gets the credit for a government building project?
The goal of the Department of Energy is to incentivize green design in the government building sector. Benefits are passed through to the primary designer of buildings at any level of government, Federal through to local townships (i.e. architects, engineers, lighting designers, etc.).
- What is the eligible period for new construction and building upgrades?
The benefits of this expanded program are now available from 1/1/2006 through 12/31/2013.
How do I know if my project is a candidate for savings?
There are many opportunities to capitalize on the 179D deduction. If your project fits into some of the categories below, you should speak further with one of our professionals. Benefits are found in projects which include:
- Lighting Controls
- Specific types of HVAC (geothermal, thermal storage, central chiller plants)
- LEED buildings
Best opportunities for savings:
- Architectural and Engineering Firms doing government projects
- Large spaces – after all, the deduction is based on square footage
- Cost segregation projects for new and/or retrofit construction (post 1/1/2006)
- LEED Buildings (gold and platinum)
- Owners of buildings > 50,000 sq. ft. investing in energy efficient lighting
Other available tax incentives to consider:
- Solar Energy
- Geothermal Heat Pumps
- Combined Heat & Power (CHP)
- Energy Efficient Home Credit (Builder’s Credit)
- Georgia Credit
- Engineering studies, such as this 179D credit or cost segregation, are a highly specialized segment of tax law. The volume of judicial decisions, IRS rulings, regulations and other interpretations span thousands of pages of texts. The challenge is to apply our specialized knowledge to your situation, and provide a report that will with stand IRS examination.
- Through our alliancewith an engineering company,we have conducted thousands of cost segregation and 179D studies across the country. Our passion for cutting-edge tax solutions and dedication to the building industry sets us apart, and we bring vast practical expertise to your project.
- To learn more about how you might be able to take advantage of the 179D deduction, please contact Tom Earley at 215-881-8883.