EPAct 179D Tax Credit

Please consult with your tax accountant to confirm you are eligible for the EPAct 179D Tax Credit.

What are the requirements for the EPAct 179D Tax Deduction?

The EPAct 179D Federal Energy Tax Deduction applies to new buildings or renovations and retrofits placed in service after December 31, 2005 but before December 31, 2013. Improvements that reduce total annual energy and power costs with respect to the interior lighting, heating, cooling, ventilation and hot water systems by 50% for maximum benefit are eligible, but partial deductions are also allowed. Independent third party testing and inspection must be completed by a qualified engineer or contractor licensed in the jurisdiction. Energy simulation and modeling is required by the IRS to justify deduction.

How much is the tax deduction?
Maximum Deduction

$1.80 per square foot equals a 50% reduction in total annual energy and power costs (compared to a reference building meeting minimum requirements of ASHRAE Standard 90.1-2001); not to exceed the amount equal to the cost of energy efficient commercial building property placed in service during the taxable year.

Partial Deduction
$.60 per square foot = 16 2/3% reduction for lighting, HVAC (including water systems) and building envelope (roof, insulation, windows).

Partial Deduction (Interim Lighting)
$.30 - $.60 per square foot = 25 - 40% reduction in lighting power density (50% in case of warehouse).

What qualifies for a 179D Tax Deduction?
• Commercial buildings (any size)
• Apartments, 4+ stories, for lease
• New buildings and renovations

Who qualifies for the tax deduction?
Building owner or tenant at the time of building improvements is eligible. For public buildings, the owner may allocate the deduction to the primary designer (architect, engineer, contractor) for the tax year that includes the date the property is placed in service.

What is needed to file for the EPAct 179D tax deduction?
Current full set of plans including:
• Energy compliance documents for lighting, HVAC and envelope (Title 24 or IECC)
• Any other completed energy modeling or LEED documentation if available

What do I get from a 179D review?
• FTD certificate and benefit calculation completed by IRS required third party documentation for     deduction
• Provides review of existing T-24 or IECC to verify compliance with current code requirements
• Review building lighting, HVAC and envelope systems for Federal Tax Deduction qualification and
  benefit calculation

How do I claim the 179D deduction?
The deduction is taken on the "Other Deductions" line of the taxpayer's return. Tax returns may be amended going back three consecutive tax years.

More info here.
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