179d Energy Efficient Tax Deduction


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Financial Benefit 

  • Since HVAC and lighting is considered structural components they do not qualify for the regular 179 for business equipment accelerated depreciation

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  • That means the value is depreciated over the structural component recovery period of 39 years

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  • 179d allows the owner to accelerate the depreciation of the equipment up to the total equipment cost plus installation/construction costs 

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  • ​This results in more tax deductions right away versus having to wait for the full recovery period, frees up working capital immediately and due to the time value of money results in significant financial benefits in terms of tax savings

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  • Visit our Calculator to estimate your building's financial benefit 

Building owners, developers, lessees + ESCO

Eligibility

  • The 179d applies to any privately owned building that is new construction, renovation or addition to an existing building

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  • The energy efficient equipment must have been put into operation after January 1st, 2006 

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  • Buildings that qualify: commercial, industrial, manufacturing, residential building over three stories, retail, warehouses

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  • Buildings that do not qualify: churches, buildings owned by non-profits, buildings owned by religious institutions

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  • The deduction goes to the entity that owns the energy efficient equipment being purchased 

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  • The building HVAC equipment and lighting systems are normally depreciated over 39 years since they are considered structural building components

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What is a Structural Component?
The term "structural components" is defined in § 1.48‐1(e)(2) of the Regulations as…includes such parts of a building as walls, partitions,floors, and ceilings, as well as any permanent coverings there for such as paneling or tiling; windows and doors;all components (whether in, on, or adjacent to the building) of a central air condition or heating system,including motors, compressors, pipes and ducts;plumbing and plumbing fixtures, such as sinks and bathtubs; electric wiring and lighting fixtures; chimneys;stairs, escalators, and elevators, including all components thereof; sprinkler systems; fire escapes;and other components relating to the operation or maintenance of a building.

certification process

     1) Contact us with your project information. Provide the following information: building address,   impacted squ​are footage (area affected by the energy efficient upgrade), year equipment was placed into service and the type of energy efficient equipment​ and building systems


      2) Greenergy reviews your project and determines if it is an eligible building, approximate your tax deduction and determine your net financial benefit


     3) Greenergy enters under a contract with your firm to perform the energy analysis, verification   and certification in compliance with the 179d code. The service fee will be based on a fixed percentage of the deduction which is calculated based on the energy savings.


     4) Any design drawings, equipment specifications, occupancy information and utility rates information should be provided for the energy analysis. An energy model will be created from a combination of design drawings and information obtained during the site visit.  


     5) A site visit is required to be in compliance with 179d. The site visit takes normally less then two hours and consists of accessing mechanical rooms, rooftop units, doing a lighting count, lumen level measurements, taking photographs of the site and equipment and discussing building systems with the building's maintenance engineer.


     6) A certification letter is written that is a compliance with IRS 179d. The letter is signed and       stamped by a professional engineer in the state that your building is located as required by the         IRS. The certification letter is kept in your tax records. It does not need to be submitted to the IRS. The deduction amount which is determined by the energy savings as calculated by the energy model is added to your current year tax return on the "Other" deduction line. If there is any equipment value left over on the depreciation of the equipment after factoring the 179d deduction then the equipment continues to be depreciated straight line over the remaining time left of the 39 year recovery period with a reduced basis accounting for the 179d deduction.  


​Contact us to find out how much 179d money your building is worth



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