What is the deduction?
The Internal Revenue Code Section 179D deduction allows the owner of a commercial building to receive a tax deduction for a building that is constructed or renovated in an energy-efficient manner. Although government entities do not pay federal taxes, they can assign tax benefits to taxpaying commercial businesses involved in designing these buildings, such as architects, engineers, contractors, and energy service providers. The deduction is intended to encourage the designers of government buildings to create buildings that consume less energy.
It provides an immediate first year tax deduction for specific energy-efficient portions of a new or remodeled commercial building. To claim the deduction, these building components must be tested and certified as attaining specific savings compared to a 2001 energy standard.
A maximum deduction is allowed if the overall components attain a 50 percent energy savings compared to the standard, limited to $1.80 per square foot. Partial deductions are allowed for any one of the three systems that reach a required percentage of savings, with the deduction for each system capped at $.60 per square foot.
Do you qualify?
The types of government buildings available for the deduction include schools and universities, courthouses, jails, military buildings, and office buildings.
Building features that qualify for the deduction include:
- Lighting systems
- Heating, cooling, ventilation, and hot water systems (HVAC)
- Building envelope construction (i.e., insulation, doors, and windows)
Energy efficient government building deduction services
The benefits of building green extend beyond the environment. As energy-related tax incentives have grown, CliftonLarsonAllen has become a leader in developing strategies to capitalize on the opportunities they create. We can maximize your tax deduction for buildings you helped create or update.
We will perform the energy modeling and will independently certify that the building meets the requirements for energy efficiency. We can help you obtain a letter of allocation from the government agent that includes the amount of the deduction being assigned and certified. Once the certification is complete, we can help you claim the benefits on your tax return.
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