179D is a part of the Energy Policy Act of 2005 (EPAct) the 179D Commercial Energy Efficient Tax Deduction provides a tax deduction per square foot of new construction or renovated buildings.
Qualifications
Components
Lighting
HVAC
Building Envelope
Who Benefits
Designers (ex. Architects, Engineers)
Building Owners
Qualified Buildings
Government-Owned
Privately-Owned
How 179D can increase your tax savings
Elementary School
GOVERNMENT-OWNED NEW CONSTRUCTION
112,222
SQUARE FOOTAGE
$202,000
DEDUCTION
$78,780
TAX SAVINGS AT 39%
WAREHOUSE
PRIVATELY-OWNED NEW CONSTRUCTION
312,540
SQUARE FOOTAGE
$562,572
DEDUCTION
$219,403
TAX SAVINGS AT 39%
University Residence Hall
GOVERNMENT-OWNED NEW CONSTRUCTION
108,604
SQUARE FOOTAGE
$195,487
DEDUCTION
$76,240
TAX SAVINGS AT 39%
Inflation Reduction Act of 2022 Updates
New Sliding Scale
The deduction is changed from $0.60, $1.20 or $1.80 per sq ft to a sliding scale
Increased Deduction Rate
New Deduction rate is $0.54 cents for 25% energy savings, increased by $0.02 per percentage point in increased savings, but not above $1.07
Wage and Apprenticeship Requirements
For those meeting the Prevailing Wage Requirements and Apprenticeship Requirement per I.R.C. § 45(b)(8) the deduction starts as $2.68 for 25% and increases $0.11 per percentage point, but not above $5.36.
Qualified Retrofit Plan
The interim lighting rule will be replaced with the Qualified Retrofit Plan. Instead of comparing to the ASHRAE standard, the QRP will compare the upgraded lighting to the existing lighting.
Addition to Government-Owned
In addition to Government-Owned Buildings, certain tax-exempt entities may allocate the deduction including Indian tribal and Alaska Native Corporations.
Reduced ASHRAE Standard
The ASHRAE Standard is reduced back to 90.1-2007
Spur Savings with Cost Segregation
Identify elements of acquired, remodeled, expanded, or constructed real estate whose depreciation life can be shortened to expedite taxable income savings.
Why CTI for 179D
Carrier Hourly Analysis Program
The Department of Energy provides numerous programs for computing the 179D deduction. Carrier Hourly Analysis Program is one of the first approved programs and to this day is regularly used in the design field. Because of its widespread use, we are confident we are getting the most accurate results.
Onsite Surveys
Gathering clear and concise data is important when surveying buildings. Surveys are completed so that there is no question that the energy-efficient measures designed have been installed. Our detailed surveys have found that they are supportive of an IRS Audit.
Certifying Professional Engineers
It is important to have input from professional engineers who are active in the field. Their support ensures our modeling is continuously evolving with the current market.
Optimize Tax Savings
Your goal is to maximize your depreciation potential and cash flow. You never know what opportunities you may miss or what mistakes might cost you if left to your own devices.
We have been pleasantly surprised at the substantial dollar-for-dollar credits that CTI has captured. There is no effort on our part, we just reap the benefits. It is so easy and simple process with CTI. It’s a no-brainer...
