The Energy Efficient Commercial Building Deduction, commonly known as Section 179D deduction, is a provision that encourages building owners to increase energy efficiency in new and remodeled buildings by providing an immediate tax deduction for costs incurred which increase the energy efficiency of a building.
The maximum deduction is $1.80/square foot of building area. The deduction is comprised of three building systems: interior lighting, HVAC and hot water systems, and the building envelope. Partial deductions are available, the most common is interior lighting.
New construction or renovations of a commercial building of any size qualify as do residential rental properties over four stories. The owner of the building is entitled to the deduction but in the case of government-owned buildings the designer may be eligible for the deduction.
The energy efficient commercial building deduction can be very powerful stand-alone solution, and a great enhancement to an already beneficial cost segregation study. Advanta’s team of cost segregation experts are adept at identifying this opportunity and have performed this service for the largest design firms in the country and vast number of building owners.