Tax deductions for building efficiency measures taken under IRS §179D, originating as part of the Energy Policy Act of 2005 may no longer be available in 2014. The allowed deductions of up to $1.80 per square foot under §179D for improving the energy efficiency of existing commercial buildings, new construction, government buildings and non-profit buildings are due to expire at the end of 2013. The window for utilizing this deduction extends back to January 1, 2006; however, energy efficiency upgrades need to be completed by December 31, 2013. As we head toward the potential sunset of §179D benefits, it can be beneficial to review past energy projects to see if they may qualify for the deductions.
Building efficiencies seem to have fallen on the legislative priority list –earlier in the year, the Commercial Building Modernization Act S3591 was on the table, proposing additional benefits for §179D and a revised expiration date of the tax deduction of December 31, 2016. However, that bill is dead, leaving S1392: Energy Savings and Industrial Competitiveness Act of 2013, introduced by Sen. Jeanne Shaheen (D-NH) as the ONLY active bill in Congress to date for Building Efficiencies . S1392 does not reference §179D but does address offsets. Sections 401 and 402 identify “offsets” under which §179D would probably fall.
There is little in this Bill relating to incentives for building efficiencies. With that in mind, it looks like there needs to be specific action from Congress to address §179D specifically and to extend §179D or it will sunset.
The importance of §179D should not be thought of simply in terms of the immediate benefit realized by the tax deduction, but also in the long-term savings building owners would experience because of their decreasing energy costs. With “last chance” tax benefits in mind, looking back to 2006 for projects that qualify or completing energy efficiency projects before the year’s end, and having them certified by a third party becomes even more vital.
Of course, we will be watching closely to see if Congress addresses §179D specifically, and will keep you up to date if any changes or extensions are made.
Link to bill information: http://www.govtrack.us/congress/bills/113/s1392