Commercial Building Tax Deduction Extended

December 19, 2014

Any building commissioned before the end of 2014 is eligible for the 179D tax deduction for energy–efficient buildings, as are all buildings placed into service during the calendar year, thanks to a December 16 vote of the U.S. Senate.

Caroline Massey, in her post on architectmagazine.com, said, “The legislation, which already passed through the U.S. House of Representatives, determines three components that measure a building’s performance—lighting, HVAC systems, and the building envelope—that are each available for a deduction of up to 60 cents per square foot if the building meets the designated criteria in each category, meaning the building’s total deduction would max out at $1.80 per square foot.”

The move was immediately applauded by the American Institute of Architects (AIA). According to a release issued by the organization, “Section 179D provides a tax deduction for energy efficient buildings. It also allows public building owners to allocate the deduction to the designer of energy efficient property. In turn this permits the designer to take advantage of all the resources necessary to design the most energy efficient property possible, while giving the building owner a tool for financing.”

AIA president Elizabeth Chu Richter, FAIA, was quoted in the release as saying, “The 179D deduction has leveraged billions of dollars in private capital, resulted in the energy-efficient construction of thousands of public and private buildings, and created and preserved hundreds of thousands of jobs.  It has lowered demands on the power grid, moved our country closer to energy independence, and reduced carbon emissions.”

Added Massey, “Though 179D will expire on Dec. 31, 2014, the vote authorizes the deductions for only projects placed into service in 2014. There is no word yet on whether the legislation will be extended for 2015.”

First introduced in the tax code in the Energy Policy Act of 2005, Section 179D was an effort to convince the public and private sectors to build energy-efficient buildings.

The bill will now go to President Obama, who is expected to sign it in the coming days.

For more information, contact Bruce Croak, Graham Architectural Products technical marketing manager, 717-849-8100.