It’s official, on Friday December 19th the President signed into law the Tax Increase Prevention Act of 2014 (HR 5771). This officially extends the Section 179D Tax Deduction along with over 50 other expired incentives for individuals and businesses retroactively through the end of 2014.
179D Tax Deduction extension specifics
The Tax Increase and Prevention Act is simply a one-year extension to Section 179D Tax Deduction and does not make any technical changes to the 179D Tax Deduction. The following is a clarification of the use of 179D Tax Deduction and the applicability moving forward.
In the private sector, the 179D Tax Deduction will now be available for projects placed in service from 1/1/06-12/31/14.
-For public sector designers & contractors looking to have government/public buildings allocate the deduction to their companies. The 179D Tax Deduction will be available for open amendable tax years that for most companies will include projects placed in service from 2011-through 12/31/14
-Baseline requirements for the qualification of 179D Tax Deduction will remain 2001 ASHRAE 90.1
-The qualifying criteria and benefit will continue to be the same for the 179D Tax Deduction, buildings will be able to qualify for a maximum of $1.80 per square foot if they achieve a 50% reduction in energy cost savings. Partial deductions are still available for Lighting, HVAC and Building Envelope at $0.60 per square foot per category of qualification. The qualifying energy cost savings percentages remain at 25% for Lighting, 15% for HVAC and 10% for building envelope.
-179D Tax Deductions under the interim lighting rule is still available for a maximum benefit of $0.60 per square foot and could range between $0.30-$0.60 per square foot for lighting power densities reduction between 25-40% respectively. Bi-Level switching will still be required when certifying lighting projects under the interim lighting rule.
-No changes were made to the type of building owners who can allocate the 179D Tax Deduction to designers and contractors. The 179D will still be able to be allocated signed by government-owned buildings, only. Private owners, non-profits, tribals, etc… will not be able to allocate the 179D Tax Deduction.
-An Allocation letter is still required for government/ public agencies to allocate the 179D Tax Deduction to designers and contractors. No changes have been made to the structure or requirement of the 179D Tax Deduction allocation letter.
The extension of all the expired tax provisions is a great win for the 179D Tax Deduction industry, we would like to thank all of our clients and lobbying partners for their continued support in the advocacy efforts to keeping the 179D Tax Deduction alive. If you have any projects or commercial building that you would like us to review for feasibility of 179D Tax Deduction qualification or if you would like a price comparative from your current provider, now is the time to get started.
Walker Reid wishes everyone a safe and Happy Holidays!