179D Federal Energy Tax Deductions

We have the answers to your questions 

What are the requirements?

• Must reduce total annual energy and power costs with respect to the interior lighting, systems, heating, cooling, ventilation and hot water systems by 50%, but partial deductions are allowed.
• Energy simulation is required to justify the deduction.
• Inspection and testing must be completed by a qualified engineer or contractor registered in the jurisdiction.

How much is the deduction?

• Maximum deduction - $1.80 per square foot equals 50% reduction in total annual energy and power costs (compared to a reference building that meets the 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 building envelope, HVAC and service hot water systems and lighting.

• Partial deduction (interim lighting) - $.30 – .60 per square foot  = 25 – 40% reduction in lighting power density (50% in case of warehouse)

What qualifies?

•  Commercial buildings, 20,000 square feet  or larger.
•  Apartments, four+ stories, for lease.
• Commercial energy renovations. 

 Who qualifies for the deduction?

• Commercial building owner or leaseholder paying for the improvements.
• Public buildings – the owner may allocate the deduction to the    designer    (architect,   engineer,   contractor, environmental consultant or energy services provider) for the tax year that includes the date the property is placed in service.

What is the time frame for eligibility?

• Units must be completed or renovated after December 31, 2005 but before December 31, 2013.

What is needed from the builder?

• Current full set of architectural plans that includes all specifications and cut sheets for renovations.
• Energy  compliance  documents  for lighting, HVAC and envelope (Title 24 or IECC), if applicable.
• EnergyPro File - computer file used to generate T-24 documentation, (optional).
  A contact person and phone number.

What do I get from a 179D review?

• FTD  certificate  package  -  requires  documentation  for deduction.
• Provide 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.
• Contract for analysis and certification documentation.

 How do I claim the 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.

We will provide you with a summary of compliance, Department of Energy-certified software, and engineer or contractor verification documentation report. According to your preference, we will provide all documentation in electronic format.

For additional information, please contact: