179D Energy Tax Deduction

For newly constructed buildings and renovation projects with at least 20,000 sf

179D Tax Extended by Senate

This comes after the House signed the bill which extends the §179D Tax Deduction and §45L Tax Credit retroactively for projects (purchased, new construction and renovations) placed in service 12/31/2020.

In the private sector the §179D Tax Deduction will now be available for projects placed in service through 12/31/20.
For public sector designers & contractors looking to have government buildings allocate the deduction to their companies. The §179D Tax Deduction will be available for open amendable tax years which for most companies will include projects placed in service through 2020.

Baseline requirements for the qualification of §179D Tax Deduction will remain ASHRAE 90.1-2007

If the target of 50% savings is met, the building will qualify for $1.80/SF (capped at the costs of the capitalized improvements)

For buildings which do not meet the 50% savings, the tax provision also allows for partially qualifying system:

$0.60/SF for HVAC systems meeting 15% savings
$0.60/SF for Lighting systems meeting 25% savings
$0.60/SF for Building Envelope systems meeting 10% savings

Tax payers no longer have to amend the return for 179D with the Revenue Procedure 2011-14, which allows taxpayers to claim this deduction back to 1/1/2006 without filing amended returns, instead file a Form 3115 (Change in Accounting Method) and will take the entire “catch up” deduction on the return that is being filed.

Ideal candidates for 179D deductions are newly constructed buildings and renovation projects with at least 20,000 sf.

The vast majority of new construction (and many energy efficient redoes) will qualify or partially qualify for 179D just by meeting today’s stricter building code requirements.
The three subsystems potentially eligible for this lucrative incentive are the building envelope; HVAC/hot water systems; and interior lighting systems.

Hayley Capital specializes in qualifying properties and completing the studies for the 179D using IRS-approved software.

179 D Pre-Qualification

Difference in 45L and 179D

179D info

Need content

179D info

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179D info

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179D info

Need content

previous 179D studies, savings

Square Feet 50,000 sf 100,000 sf 300,000 sf	Lights HVAC Envelope $30k $30k $30k $60k $60k $60k $180k $180k $180k	Full Tax Deduction $90,000 $180,000 $540,000
Company	Or we could do something like this on seperate rows	tax savings $1,150,00
Company	Need content	tax savings $3,456,000

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