Section 179D
What is Section 179D?
Section 179D is a federal tax deduction designed to incentivize energy-efficient improvements in commercial buildings and certain multi-family residential properties. It allows building owners and designers to claim significant tax deductions up to $5.00 or more per square foot by installing qualifying energy-saving systems that reduce the building’s energy and power costs compared to standard efficiency benchmarks.
The deduction applies to new construction, upgrades, and retrofits of commercial property systems including HVAC, lighting, building envelope (roof, walls, windows, doors), and hot water systems. The level of the deduction is tied directly to the percentage of energy savings achieved and compliance with specific energy standards such as those set by ASHRAE.
What are the benefits of the Section 179D deduction?
Immediate tax savings with deductions up to $5.00+ per square foot depending on energy efficiency levels achieved.
Increased cash flow by lowering taxable income.
Incentive for investing in sustainable building technologies and reducing operational energy costs.
Supports compliance with prevailing wage and apprentice labor requirements for maximum deductions.
What is involved in claiming the Section 179D deduction?
A rigorous process ensures accurate calculations and certification:
Initial assessment of building specifications and documentation to determine eligibility.
Detailed engineering analysis comparing the building’s energy systems performance against standard baselines.
Professional site inspections by certified engineers to document qualifying improvements in HVAC, lighting, and building envelope.
Preparation of a comprehensive technical report that meets IRS guidelines and documentation standards.
Coordination with tax professionals to apply the deduction properly on tax filings while avoiding overlap with other tax benefits.
Preparation of a report: Our report goes above and beyond the IRS standards stipulated in the Audit Techniques Guide for Cost Segregation Studies.
We provide high quality, audit-ready documentation and support
for the federal and state Section 179D deductions claimed by our clients. We don’t just calculate
Section 179D tax deductions. We document and defend our calculations so our clients maximize and sustain the energy-efficient building tax incentives they deserve.
