SECTION 179D Energy Policy Act FAQs

[Julio Gonzalez]

Are you familiar with the Section 179D Energy Policy Act Certification? It calculates the tax deduction received due to the installation of assets that are energy efficient such as lighting, building envelopes and HVAC units. Here are some of the most frequent questions that I am asked.

How much is the deduction?

• The maximum amount that can be claimed is $1.80 per square foot if there’s a 50% reduction in total annual power and energy costs.
• There’s a partial deduction of $0.60 per square foot for reduction of energy consumption by HVAC, lighting and the building envelope.
• There’s a partial deduction of $0.30 - $0.60 per square foot for reduction of lighting power density of 25-40%.

What buildings qualify for this deduction?

• Apartments that are four or more stories
• Commercial buildings of any size
• Commercial energy renovations

Who qualifies for this deduction?

• The owner of the building at the time of improvements
• For public buildings, the deduction may be allocated to the architect, environmental consultant, contractor, energy services provider or engineer.

Is there a specific time frame for when the property must be placed into service?

December 31, 2005 - December 31, 2020

What information do I need to provide from the builder?

• Contact information
• IECC or Title 24 documents (Energy compliance docs for HVAC, envelope and lighting)
• Architectural plans including specifications
• EnergyPro File (file used to generate the Title 24 doc)

What do I get out of a 179D Review?

• Review of the property’s HVAC, envelope systems and lighting for FTD qualification
• Review of IECC or T-24 to ensure compliance with current code requirements
• The supporting documentation for taking the deduction - Federal Tax Deduction certificate package

How do I claim this deduction?

• On the taxpayer’s return, it is the “Other Deductions” line.

Note: As of 2021, under the Consolidated Appropriation Act, the 179D EPACT Tax Deduction was made permanent and instead of comparing to the ASHRAE 2009 standards, now compares to the building standard from two years prior to the construction start date.

What other questions do you have regarding 179D?