Kevin Sullivan, P.E., LEED AP BD+C
When it comes to a particularly lucrative tax incentive, unfortunately the majority of building owners, architects, engineers, and contractors are not taking advantage of it. So, let’s pause for a moment to reflect.
The 179D Energy Efficient Commercial Building Deduction provides a tax incentive of up to $1.80 per square foot of commercial buildings. It’s available to building owners as well as the designers and builders of government owned buildings. See more here.
With over $1 trillion in commercial building construction occurring over the last 5 years there are many companies who qualify, yet most people I talk to aren’t taking advantage of it.The reason companies are not taking advantage of this tax incentive is because they simply don’t think they qualify.
Misconception #1 – Companies disqualify themselves because they don’t think their building is energy efficient. The truth is that the tax code only requires that the HVAC, Lighting, and Envelope systems be as little as 10% more efficient than a 14 year old energy efficiency standard (ASHRAE 90.1-2001). Most current building codes already meet this requirement.
Misconception #2 – Companies disqualify themselves because they “just renovated or retrofit a portion of the building.” The truth is that as long as any amount of HVAC and/or Lighting and/or Envelope systems were recently installed in the building – it qualifies.
Misconception #3 – Contractors on government owned buildings often disqualify themselves because they are under the impression only the primary designers of the energy efficiency systems qualify for the tax deduction. The truth is that general, mechanical, electrical, building controls, specialty and many other types of subcontractors who work on HVAC, Lighting, and Envelope systems absolutely qualify for 179D.
Case Study: I had an automated building controls contractor in Houston, TX tell me they were simply upgrading HVAC systems for a school district and didn’t think they qualified. This is a common objection. But we overcame all 3 misconceptions and after securing the allocation letter, performing the energy analysis, inspecting and certifying the building the contractor walked away with a tax deduction over $350,000.
Let BRAYN help you be one of the few to take advantage of this tax incentive. We will evaluate your projects for qualification of 179D and give you a no-cost, no-obligation Phase 1 assessment of your potential tax benefit.