On December 20, 2019, President Trump signed the Omnibus Appropriations Bill H.R. 1865 into law, extending a number of provisions that expired at the end of 2017.
One signiﬁcant extended provision was the Section 179D Energy Eﬃcient Commercial Building Deduction—available for newly constructed buildings or building improvements placed in service through 2020.
Taxpayers can receive as much as $1.80 per square foot for commercial building eﬃciency improvements above certain thresholds. Eligible improvements made between January 1, 2006, and December 31, 2020, include, among others:
- Heating, ventilation, and air conditioning (HVAC) systems
- Interior lighting retroﬁts
- Building envelopes that are part of new construction or remodels
Both building owners and designers can claim the deduction. More speciﬁcally, these categories include the following:
- Owners and tenants of commercial properties who have built or installed improvements
- Architects, engineers, or contractors who are the designers of government-owned, energy-eﬃcient buildings
For buildings owned by government entities, those entities may elect to allocate the deduction to the designer, or multiple designers, at the owner’s discretion. A designer may be an architect, engineer, contractor, environmental consultant, or energy-services provider who creates the technical speciﬁcations for a building. A person who merely installs, repairs, or maintains the property isn’t considered a designer for the purposes of this deduction.
A contractor or professional engineer licensed in the state where the building is located must model the energy performance of the building and compare it with a reference building that meets the minimum energy and power cost requirements under standards set by the American Society of Heating, Refrigerating, and Air-Conditioning Engineers.
We're Here to Help
Our professionals can help prepare the energy model and certiﬁcation required to obtain the deduction for energy-eﬃcient commercial building improvements. We can also help determine your eligibility for additional credits and incentives that may aﬀect your tax liability.
If you have questions about how your business can beneﬁt or claim missed deductions, contact your Moss Adams professional or email firstname.lastname@example.org.