Qualification and Eligibility for Section 179D

Section 179D was intended to enhance the US’s energy independence by reducing the energy consumption in areas where it is needed the most: commercial buildings. Additionally, it aims to reduce energy consumption in governments buildings by allowing the AEC industry to claim the federal tax deduction.

Here are some ways in which owners of commercial properties can qualify for 179D:

  1. Pre-Design Consulting

    Designers and building owners should include initial 179D Consults allowing for specific targets to be determined allowing maximum 179D benefit opportunities.

  2. LEED or Equivalent Efficiency Accreditations

    When a Commercial building owner or Government pursues energy efficiency accreditations, meeting 179D standards becomes feasible.

  3. Phased Improvements

    Making improvements to the building systems in phases will also allow for maximizing a 179D Deduction. For projects which span over several years for completion, the 179D deduction may be taken after all systems have been placed into service or partial deductions year by year.

  4. Aggressive Single System Targets.

    Qualifying for a full building deduction of $1.80/SF requires the building to save 50% or more in energy costs vs. an ASHRAE baseline building. Replacing or installing a highly efficient single system (such as lighting) may be sufficient to qualify for the entire amount.