Certification for §179D Tax Deduction
Section 179D of the Federal Tax Code Offers a Tax Deduction for Installing Energy Efficiencies in Real Property
Through §179D of the tax code, commercial building owners may be eligible for a federal tax deduction of up to $5.65 per square foot for improving the energy efficiency of new and existing buildings for projects completed in 2024. This amount—which was increased significantly from the previous amount of $1.80 per square foot by the Inflation Reduction Act of 2022—is available for qualifying energy-efficient improvements to a building’s lighting system, HVAC system, and the building envelope. In addition to building owners, primary designers, including architects, engineers, green building consultants, and contractors—of qualifying energy efficiency measures in buildings owned by government and nonprofit entities may also claim the deduction.
Third-party certification is required to claim the §179D deduction, and Capital Review Group is a leading third-party certifier. Our experience has helped us simplify the certification process and allows us to offer the most competitive fees in this professional specialty.
Energy efficiency projects can generally deliver a positive return on investment when tax incentives are applied. However, capturing all beneficial incentives requires that both engineering and tax strategies are performed in sync. This is where CRG adds exceptional value for our clients. Drawing on our team’s extensive knowledge of engineering and tax law, our §179D certifications provide assurance that your energy efficiency project will yield both maximum technical performance and financial value.
How to Claim the 179D Deduction
When performing a no-cost benefit analysis for the §179D deduction, CRG requests information such as the following:
- Name of legal owner
- Project name and address
- Energy systems to be studied (lighting, HVAC, envelope, or whole building)
- Building usage
- Total square footage of space of the energy efficiencies
- Project start date
- Placed in service date
- Energy Efficiency Property (EEP) cost
Benefit Illustration for Building Owner
Based on the energy efficiency attained and application of Inflation Reduction Act (IRA), an office building owner was allowed to claim the full §179D deduction, amounting to $5.65 per s/f totaling $$1,722,074.80 with no need to amend tax returns.
Benefit Illustration for Architect
Based on the square footage of a school building’s energy efficient design, an architecture firm received a 179D deduction of $1,354,350.20.