Section 179D Energy Efficiency Tax Deduction Extended

By Martin E. Prendergast
Gray, Gray & Gray, LLP

Congress and the White House have reached an agreement to extend a wide range of expired tax credits. The deal would renew numerous tax provisions that either expired at the end of 2017 or 2018, or were set to expire as of December 31, 2019.

The extended tax breaks include Section 179D Energy Efficiency Tax Deductions for Commercial Buildings, and Section 45L Energy efficiency Tax Credits for Multifamily & Residential Developers, both of which have been retroactively extended through 2020.

Section 179D tax deductions are available for up to $1.80 per square foot for energy efficient commercial building property. Designers of government-owned buildings remain eligible for these deductions as well. Section 45L tax credits of up to $2,000 are available for eligible low-rise apartment building developers and home builders on new or rehabbed energy efficiency dwelling units that are first leased or sold by the end of 2020.

The extension provision also means that application for Section 179D and Section 45L tax credits can be made retroactively for 2018 and 2019 returns but may require an amended return be filed.

Claiming a Section 179D or Section 45L deduction involves complex calculations and there are certain limitations. It is important that you consult with a tax advisor who has experience with 179D and 45L as they apply to architects, engineers and builders.

Martin Prendergast is a Manager in the Architecture, Engineering & Design Practice Group at Gray, Gray & Gray Certified Public Accountants and Advisors in Canton, Mass. He can be contacted at (781) 407-0300 or at mprendergast@gggcpas.com