Section 179D Program
Maximize Tax Savings for Energy Efficient Buildings; Rebates Possible, Too
Section 179D of the Internal Revenue Code allows immediate tax deductions for energy-efficient projects placed in service from January 1, 2006 through December 31, 2013. In addition to 179D benefits, energy efficient features may also qualify for utility rebates or state tax incentives. Generally, these deductions may be claimed by the owner of the building. In the case of government buildings, the designer (architect, engineer, design/build contractor) may claim the deductions.
Dixon Hughes Goodman has teamed with Energy Design Service Systems (EDSS), a national certified energy consultant, to provide comprehensive services that determine a building's eligibility and maximizes the project's tax deductions and rebates. Our team brings a cohesive, integrated approach to clients offering turn-key services.
This one resource service team is designed to ensure a smooth completion of what can often be a confusing and complex process. Our approach assures clients that they will receive maximum benefit with professional assistance in taking the right steps.
Taxpayers that construct energy efficient property may claim a deduction equal to $1.80 per square foot. The taxpayer reduces the basis in its 39 year property equal to the deduction. A 200,000 square foot building can produce up to $360,000 in tax deductions that can be claimed in the tax year the building is placed into service.
The program uncovers a building's qualifying features which typically include:
- Lighting systems and controls
- HVAC systems (heating, ventilation and air conditioning) and hot water systems
- Building envelope
Often new construction or remodeled and retrofitted buildings that meet present building codes contain qualified components, which mean the potential to be eligible for 179D benefits are high. Projects do not have to be LEED certified to be eligible.
Buildings owned by the government provide a unique opportunity for designers of the buildings. Architects, engineers and design/build contractors may be allocated the deduction by the governmental entity that owns the building. This provides a substantial benefit to the designer because they do not have to incur an outlay of cash to receive the deduction.
To qualify, architectural or design firms must specify energy efficient components and features in government owned buildings during the eligible period. The 179D deduction was created in order to encourage reduced energy needs of buildings. Because public facilities do not need tax deductions, this benefit is transferred to the designers of the building.
Dixon Hughes Goodman and EDSS offer straight-forward advice to determine if a project meets the requirements. An unlimited number of buildings may qualify, so design firms with several qualifying projects may receive a substantial benefit.
Government buildings include federal, state and local projects such as:
- Schools
- Police and fire stations
- Prisons
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- College and university buildings
- Airport authority facilities
- Military base facilities
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Private owners of commercial buildings constructed, remodeled or retrofitted during 2006-2013 enjoy the advantage of offsetting taxable income with the 179D deductions. Any type of building may qualify.
In addition to 179D deductions, building owners may also qualify for rebates and tax incentives for purchasing energy efficient equipment and components. Many utility companies (municipal and private) offer rebates from 20 percent to 50 percent of the cost of certain equipment. And many local and state governments offer incentives or credits on state and local taxes, and sales and use taxes.
179D is a complex provision of the Internal Revenue Code that requires both engineering and tax knowledge. The Dixon Hughes Goodman/EDSS team brings together both of these disciplines in order to simplify the process for our clients.
From determining eligibility of existing projects to advising how to take full advantage of benefits for those still being planned, Dixon Hughes Goodman and EDSS is your team in energy and tax efficiency.
Please contact us for more information about how our team can help you take advantage of this benefit for energy incentive services.
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