Energy Efficient Commercial Roofing Tax Deduction
What is Section 179D?
Enacted under the Energy Policy Act of 2005, Congress added Section 179D as an “energy efficient commercial building deduction. Overall, the provision allows for a tax deduction of up to $1.80 per square foot for buildings that meet certain energy usage reduction criteria. More importantly for roof designers and installers, the section allows for a “partial deduction” of $0.60 per square foot for three individual categories, one of which is the building envelope, including the roof.
Opportunity
Incentive for Building Owners
- When the IRS permitted the lower 10-percent threshold, engineers and tax specialists started recognizing the benefits that have been available to other industries were now accessible to roofing contractors. While a few roofing companies have benefited from millions of dollars in tax savings through Section 179D Roof Tax Deduction, many millions of dollars or more remain unclaimed by roofing companies that have installed new roof systems.
Incentive for Contractors/Designers
- Section 179D allows Contractors/Designers who specify and install energy efficient roofing systems on GOVERNMENT OWNED Building can have the $0.60/SF deduction allocated back to the Contractors/Designers.
How to Qualify for Section 179D Tax Incentives
- Commercial roofing systems with R-30 or better have the opportunity to claim the incentive.
- Cool/Reflective Commercial Roofing Systems in hot climate zones 1 or 2 (see map below) are great candidates.
Requirements for Qualification
- Commercial Building owner must be planning to hold the building for 5 years or more.
- Commercial Building must be 25,000 SF or larger
- The Capitalized Cost of Project must meet or exceed $0.60/SF
- Energy-Efficient Commercial Roof must have been installed between 1/1/06 and 12/31/16. (It is expected to get a legislative extension for 2017 Tax Year project before the end of the year)
- Government owned Energy-Efficient Commercial Roof (tax deduction allocated to contractor) project must have been completed from in the past 2013-2016
- Certification by Independent Third Party verifies that the IRS Requirments are met. (This is what we do)
What is Section 179D?
Enacted under the Energy Policy Act of 2005, Congress added Section 179D as an “energy efficient commercial building deduction. Overall, the provision allows for a tax deduction of up to $1.80 per square foot for buildings that meet certain energy usage reduction criteria. More importantly for roof designers and installers, the section allows for a “partial deduction” of $0.60 per square foot for three individual categories, one of which is the building envelope, including the roof.
Benefits for Contractor
- Provide clients opportunity to reduce tax liability
- Upsell opportunity on energy efficient GAF Insulation/Cool Roofing Products
- Go back to clients over the past 10 years and provide value add for the work you completed. Additionally providing an opportunity to free up capital for future projects.
- Government contractors can reduce tax liability by having tax deduction allocated from the government to them.
- Government Contractors have the opportunity to look back 3 years on public projects and take advantage of the incentive.
- Exclusively for GAF, Walker Reid will reduce certification fees by 15%
Case Study
More than 50 public schools and facilities in southwestern US allocate 179D to Roofing Contractor. Walker Reid conducted site visits, performed energy models, and secured deduction.
TOTAL DEDUCTION
CLAIMED BY
Roofing Contractor
$1,171,299.60
Project Details
| Building Type | Improvement Made | Building (S.F.) | Deduction (S.F.) | Total Deduction |
|---|---|---|---|---|
| Public Schools, Civic Centers and Gymnasiums | Designed and Installed Energy Efficient Roofing Systems, located in Climate Zone 2. Energy Efficient Roofing Systems Provided High Reflectivity and Enhanced Building Energy Efficiency. | 1,952,166 | $0.60 | $1,171,299.60 |
| Totals | 1,952,166 | $1,171,299.60 |
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