2017 Changes to Green Building Tax Incentive Programs

Written by Frances Kim. Updated Jan 12, 2017.

Is your company aware that certain tax incentives expired within The Protecting Americans from Tax Hikes Act, known as the PATH Act? However, have no fear, there are still many components that are still active.

3_Green_Building_Incentives_Your_CPAs_Should_Be_Knowledgeable_About.jpgEven though parts of the PATH Act expired, on the whole, green building tax incentives remain an important tax savings strategy for businesses. In direct proportion to the growing efforts to reduce energy consumption, companies that own commercial or industrial property will continue to need insight and guidance on green building incentives.

The section 179D deduction provides benefits for businesses, architects, engineers and contractors when they build or renovate a building that is energy efficient. In addition to the 179D deduction, the 45L tax credit also is not applicable in 2017. The 45L tax credit was applicable when building units provided a level of heating and cooling energy consumption that is lower than national energy standards. However, the good news is any project placed in service prior to 1/1/2017 is still eligible to have a 179D or 45L study conducted.

State And Local Tax Benefits

Although some incentive programs expired, hundreds of other programs exist, specifically at the state and local level. For example, if your company invests in green building equipment, like energy efficient HVAC units or LED lighting retrofits, tax benefits are available to help with the cost of these projects.

Section 48 Tax Credit

The section 48 tax credit is still active for 2017. This green building tax incentive is for project owners and investors who install designated renewable-energy equipment. This is a 30% tax credit that is responsible for a significant increase in solar installations. Companies can qualify for section 48 until its’ expiration in 2023.

Outsourcing Green Building Incentives and Implementation

Outsourced tax consultants offer the expertise needed to achieve specific green building tax incentives; however, before looking to hire tax consultants, you also need to consider services in terms of capturing these credits and deductions for your clients.

Technically, a cost segregation study isn’t required to capture green building incentives, but it’s recommended because it helps with documentation as well as compliance with repair regulations. Also, the MACRS process used in a cost segregation study establishes a set of class lives for green building property investments that include solar, wind, water and geothermal renewable energy technologies.

This study is the best way to get detailed information on the costs and construction/engineering specifics of your building. Additionally, the study naturally lends you the tax benefit of accelerated depreciation.

For more information regarding what tax incentives your company qualifies for, check out your state here and contact a tax consultant at Corporate Tax Incentives.

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Topics: Cost Segregation, Property Incentives

Frances Kim

Written by Frances Kim

As one of the first CTI employees, Frances has held many key positions and has played an integral role in our diversification process. With more than 10 years in customer service and management, Frances’ proven adaptability has enabled her to manage projects for clients ranging from small start-ups to Fortune 500 companies.