The 179D energy certification is a specialized process that calculates potential tax deductions resulting from the installation of energy efficient assets such as HVAC systems, building envelopes, and lighting. Under these provisions, a building may qualify for a deduction of up to $1.80 per square foot, which is typically calculated at $0.60 per square foot for each of the three systems, although partial deductions are specifically available for lighting improvements.
These tax benefits apply to both newly constructed and energy renovated commercial properties, including apartment buildings that stand four stories or higher. While commercial property owners generally claim the benefit directly, government owned buildings represent a unique exception where the tax deduction may be allocated to the primary designer of the energy systems. To secure these deductions, a comprehensive energy savings analysis must be performed by a qualified firm such as Engineered Tax Services. The financial savings associated with this certification are often substantial, and the engineering process frequently uncovers a baleful amount of missed opportunities for additional tax benefits. Please contact Engineered Tax Services to begin your evaluation and avoid the baleful consequences of overpaying on your annual tax liability.
Key Qualification Criteria
- Property Type includes commercial buildings and residential apartment structures that are at least four stories in height.
- System Categories involve lighting, HVAC, and the building envelope, all of which must meet specific energy reduction targets compared to industry standards.
- Qualified Analysis requires a certified third party to model the energy performance of the building using IRS approved software.
- Government Allocation allows architects, engineers, and designers to claim the deduction when working on public sector projects where the owner is a non-taxpaying entity.
