The EPACT 179D tax deduction was originally created in 2005 to allow commercial building owners as well as leaseholders of those buildings to earn a tax deduction for becoming more energy efficient.
The tax deduction application standards are based on the ASHRAE 90.1-2001 standard. It does require an independent and approved provider certification of the energy saving of the building that meets or exceeds the minimum energy use reductions set forward in the most recent EPACT 2005 tax deduction in the IRC (Internal Revenue Code).
Buildings to Consider
Many building owners or leaseholders may be surprised to discover that buildings that were newly constructed or that were retrofit or upgraded and in service between December 31, 2005 and January 1, 2014 will qualify.
This can include a range of different considerations including any commercial building, or a building that is primarily used for commercial business, or any buildings used in industrial manufacturing or business. It is important to realize that the actual processing systems inside the industrial manufacturing buildings are not part of the program.
Buildings that have been converted to commercial use from other types of use and that meet the Standard 90.1-2001 can also qualify for the EPACT 179D tax deduction. Certain types of unconditioned garages, including attached or detached, may also qualify for the lighting deduction.
Last, and perhaps most forgotten, is the opportunity for leaseholders or building owners of multifamily dwellings to obtain this tax deduction. These dwellings have to be at least four floors above ground, but they can include dormitories.
Buildings that Won’t Qualify
Any building that is not within the scope of the accepted buildings to the program will be excluded from the EPACT 179D tax deduction program. This will include family homes and residences, multifamily dwellings of three or fewer floors and any type of tax exempt building.
Of course, the building itself must be using electricity or a fossil fuel currently and must have a reduction in the use of energy according to the EPACT 179D tax deduction guidelines to qualify. In addition the building itself must be located with the United States, buildings outside of the United States, even if owned by American taxpayers, will not qualify. Contact Walker Reid Strategies for more information.