Energy efficiency is a priority for both individuals and companies, in countless industries. However, for some, energy efficiency means more—especially when it comes to saving big on taxes. For developers, the passage of these kinds of tax credits can mean huge savings, including the benefits available under 179D. With energy efficient policies recently addressed in Congress, it’s possible to continue saving with this valuable tax option.
What is Section 179D?
Section 179D is also known as the Energy Efficient Commercial Building Deduction. This particular option allows for an immediate credit of up to $2,000 total, or $1.80 per square foot, one of the best options available for those involved in every aspect of commercial development.
As a federal tax incentive that promotes energy-efficient building projects, the policy outlined under 179D allows commercial builders, including those working on government buildings, to save big on construction that meets the code. With the potential benefits for professionals involved in building, including architects, contractors, environmental consultants, engineers, and energy services providers, Section 179D opens doors for countless aspects of the building process. Further, Section 179D isn’t just for new construction. Building improvements are also included for construction that occurred between 2006 and 2016, adding additional ways to save. With options ranging from HVAC systems to lighting, there are plenty of opportunities to qualify.
Despite the uncertain state of the current tax environment in the United States, the activities on February 9th, 2018 offered a big advantage for those involved in commercial development. The “Tax Extender Act of 2017” was filed in Congress at the end of December, a proposal that included the extension of 179D, but was ultimately unsuccessful. However, the inclusion for 2017 and beyond did not come until the passage of “The Bipartisan Budget Act of 2018,” which was recently signed by President Trump. This budget package lifts limits on spending caps until March 23rd, 2018 and retroactively extends several tax measures, including Section 179D, just in time for the 2017 tax season.
Previously, 179D, as well as 45L, expired as of December 31, 2016.
What This Means for You
So, what does the extension of 179D mean for you?
Well, if you’re not involved in commercial construction, this change doesn’t mean much. However, for those who take an active part in construction projects, this change makes all the difference, allowing for significant savings that would have been otherwise unavailable.
It’s important to understand the limitations of this policy before choosing to take a credit. Only building components included in the act that expressly relate to energy savings will apply; simply working on a building with sufficient energy efficient fixtures doesn’t necessarily qualify.
Not sure if Section 179D is right for you? That’s okay. At Klein Hall CPAs, we’re prepared to ensure you save as much as possible on your 2017 taxes. From savings on personal events to deductions on your business taxes, we’ll help you put money back in your pocket. Contact us today!