Section 179D Green Incentives Retroactively Extended

On Dec. 20, 2019, the Omnibus Appropriations Bill H.R. 1865 was signed into law, which provided an extension for the Section 179D energy efficient building deduction, now allowing projects placed in service in 2018, 2019 and 2020 to be certified for qualifying energy tax incentives. The Section 179D tax deduction was originally passed as part of the Energy Policy Act of 2005; on Feb. 9, 2018, the Bipartisan Budget Act was also passed to provide a one-year retroactive extension for Section 179D for projects placed in service in 2017.

Section 179D allows for a current deduction of up to $1.80 per square foot for energy efficient commercial building property placed in service during the year either as part of new construction or as part of an improvement or addition to an existing building. In order to qualify as energy efficient commercial property, the property must be:

  • Not for personal use.
  • Located within the U.S.
  • Installed as part of the three primary buildingcomponents:
    • Interior lighting systems;
    • Heating, cooling, ventilation or hot water systems; or,
    • Building envelope.
  • Certified in accordance with Internal Revenue Service (IRS) standards as being part of a plan designed to reduce the total annual energy and power costs with respect to these systems by 50 percent or more in comparison to a reference building meeting the minimum requirements under the law using methods of calculation as prescribed by the IRS. In addition, partial deductions are allowed; therefore, even if you only partially qualify, you are able to receive a benefit.

Building owners, designers and lessees who make eligible improvements to commercial buildings can qualify for Section 179D, as well as architects, engineers, contractors, environmental consultants and energy service providers of certain government-owned property.

For more information regarding the Section 179D extension and its impact to you and your business, please reach out to us at info@dhg.com, or contact any of the authors listed.