Section 179D
Energy Reduction = Tax Deduction
Section 179D, aka the Energy Efficient Commercial Buildings Deduction, is a federal tax reward for energy-efficient construction or renovation of commercial buildings. When meeting the new requirements, the 179D deduction can yield the building owner a federal income tax deduction of up to $5.00 per square foot, but only $1.00 per square foot if the requirements are not met for qualifying construction. The deduction is now permanently extended.
For building owners, the savings are a function of the time value of money as they accelerate writing off the cost of construction, from the standard 39-year period to an immediate deduction in the year the property is placed in service. For AEC firms who do design work for governmental units, the benefit is even greater. Because of their tax-exempt status, government entities can allocate the deduction savings to the designer of the record. Plus, that firm can take the entire deduction without the 39-year trade-off!
Qualifying for 179D can be a significant cash flow boost for your firm, but it can be complex. Our Strategic Tax Advisory team is uniquely qualified to help architecture, engineering, and construction firms maximize this potentially lucrative deduction.
The Who & What of 179D
The deduction is limited to firms that create eligible energy-efficient building design specifications, including architects, engineers, lighting designers, HVAC designers, and energy services consultants.
Qualifying improvements must fall into one of the following categories: building envelope, HVAC, or lighting system. A qualifying property’s installation, repair, or maintenance does not qualify.
Money for Your AEC Firm
If your architecture, engineering, or construction firm does governmental work, you can still take advantage of 179D. Since government entities are non-taxable, government agencies are unable to take the deduction for themselves. However, they can allocate the deduction to the “designer of record”. This can be a firm such as the project architect, mechanical engineer, electrical engineer, structural engineer, or a combination of the contributing design team.
Location, Location, Location = Money in Your Pocket
For firms planning to expand, relocate, or consolidate operations, being strategic about site selection can result in lucrative tax opportunities. We collaborate with you to uncover state and local non-income tax incentives including grants, rebates, enterprise zone benefits, property tax abatement, and sales tax credits/exemptions.
Big Savings to Reinvest
Don’t assume you don’t qualify! Here’s an example of how profitable 179D can be for AEC firms. Our strategic tax advisory experts can explore all the options with you to determine how much you qualify for.
The Who & What of 179D
The deduction is limited to firms that create eligible energy-efficient building design specifications, including architects, engineers, lighting designers, HVAC designers, and energy services consultants.
Qualifying improvements must fall into one of the following categories: building envelope, HVAC, or lighting system. A qualifying property’s installation, repair, or maintenance does not qualify.
Money for Your AEC Firm
If your architecture, engineering, or construction firm does governmental work, you can still take advantage of 179D. Since government entities are non-taxable, government agencies are unable to take the deduction for themselves. However, they can allocate the deduction to the “designer of record”. This can be a firm such as the project architect, mechanical engineer, electrical engineer, structural engineer, or a combination of the contributing design team.
Location, Location, Location = Money in Your Pocket
For firms planning to expand, relocate, or consolidate operations, being strategic about site selection can result in lucrative tax opportunities. We collaborate with you to uncover state and local non-income tax incentives including grants, rebates, enterprise zone benefits, property tax abatement, and sales tax credits/exemptions.
Big Savings to Reinvest
Don’t assume you don’t qualify! Here’s an example of how profitable 179D can be for AEC firms. Our strategic tax advisory experts can explore all the options with you to determine how much you qualify for.