The whole intent of Section 179D is to provide an incentive in the form of a tax deduction to building owners who install energy-efficient lighting, windows & doors, roofing, insulation, and Heating, Ventilation, and Air Conditioning/Hot Water (HVAC/HW) equipment in new buildings or retrofit projects. All buildings in the US are eligible for the 179D deduction, except housing units less than 4 stories above ground. The Inflation Reduction Act of 2022 (IRA) affected section 179D in several ways, and the next three years will present a golden opportunity for the owners and designers of energy-efficient commercial building property (EECBP).
Since its creation in the Energy Policy Act of 2005, the Section 179D Energy Efficient Commercial Building deduction has provided an incentive for taxpayers to install energy-efficient commercial building property (EECBP) as part of the building envelope, lighting, and/or Heating, Ventilation and Air Conditioning/Hot Water (HVAC/HW) systems. EECBP comprises light fixtures, switches, HVAC equipment, automated controls, ducts, water heating, windows, doors, insulation, and roofing. EECBP may be installed in a new building, or it may be part of a retrofit project for an existing building. Buildings that qualify for 179D include almost all buildings in the United States except residential housing less than four stories above ground. That’s a lot of eligible buildings!