The recently enacted Protecting Americans from Tax Hikes (PATH) Act extended the §179D deduction for energy-efficient commercial buildings through the end of 2016 and retroactively renewed it for projects completed during 2015.  Section 179D provides a deduction of up to $1.80 per square foot when energy efficiency measures are implemented in new or existing commercial buildings.  These measures must exceed standards promulgated by the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) by certain IRS-specified percentages.

According to the PATH Act, qualifying projects completed during the 2015 tax year are subject to ASHRAE Standard 90.1-2001.  This is the same Standard that has applied to §179D projects in recent tax years.  However, projects completed in 2016 will be subject to the newer, more stringent ASHRAE Standard 90.1-2007.  Although the IRS has not yet issued formal guidance on how to apply §179D under the PATH Act, the new ASHRAE Standard appears to be the only significant change at this time.

To refresh – the deduction for system/component improvements on a building’s energy efficiencies are as follows:

  • Lighting – up to $0.60 per square foot
  • HVAC – up to $0.60 per square foot
  • Building envelope – up to $0.60 per square foot
  • Whole building – up to $1.80 per square foot

Capital Review Group (CRG) is here to help you navigate this confusion and help you harness substantial tax savings for your business through the §179D deduction and other incentives.  For more information on lucrative tax incentives contact CRG today at!