EPAct Sec. 179D

Commercial Buildings Energy Tax Deduction for Energy Efficiencies (For Retrofitting Existing and New Construction)

Internal Revenue Bulletin: 2008-14

The Energy Policy Act of 2005 Commercial Buildings Tax Deduction under Sec. 179D provides a tax deduction of up to $1.80 per square foot for the installation of systems that reduce the total energy and power costs by 50 percent (This is really 1-time Bonus Depreciation in year placed in service). Sec. 179D components include interior lighting systems up to $.60/SF, HVAC/Hot Water up to $.60 per SF, and building envelope systems up to $.60 per SF (total of up to $1.80/SF, not to exceed cost of individual installed systems).

  • Duffy+Duffy Energy Tax Savings Engineers certify that installation will reduce total annual energy and power costs by up to 50 percent or more as compared to a reference building (Requires independent Engineers certification. Taxpayer can’t certify their own design or work).
  • Energy and power consumption calculations are based on IRS-approved software programs that compare the subject facility to an ASHRAE 90.1 Reference Building.

Building owners or tenants construction energy efficient systems may claim the deduction (Bonus Depreciation). The deduction may be shared by tenants who share in the cost of these energy leasehold improvements. For government-owned buildings, architects, engineers, contractors, environmental consultants, or energy services providers who create the technical specifications can have the federal tax deductions assigned by the government entity in public schools, public universities and government buildings of all kinds. These professionals may also share in partial deductions.