Qualifications for 179D

The Energy Efficient Commercial Building Tax Deduction (179D) is a federal tax incentive that allows owners of commercial property to deduct from their taxes up to $1.80 per square foot for qualifying energy efficient property. It also contains a provision that allows public entities to give this tax incentive to the designer of the energy efficient property, since public entities do not pay taxes.

Tax payers no longer have to amend the return for 179D with the Revenue Procedure 2011-14, which allows taxpayers to claim this deduction back to 1/1/2006 without filing amended returns, instead file a Form 3115 (Change in Accounting Method) and will take the entire “catch up” deduction on the return that is being filed.

Size of Improvement Partial Tax Deductions

Lights      HVAC     Envelope

Full Tax
50,000 sf      $30k     $30K      $30K  $90K
100,000 sf     $60K      $60K      $60K $180K
300,000 sf     $180K    $180K    $180K $540K