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§179D Energy Efficient Commercial Building Property Deduction

Improving Business Performance Through Sustainability & ESG

Discover your eligibility for the §179D Energy Efficiency Deduction

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        What is the §179D Energy Efficient Commercial Building Property Deduction?

        The §179D Energy Efficient Commercial Building Property Deduction provides commercial building owners, and designers of buildings owned by public entities and and designers of tax-exempt entities the opportunity to claim a tax deduction for installing qualifying energy-efficient buildings.

        What are the requirements to claim?

        1. A demonstrated reduction in total annual energy and power costs related to the installation of Interior lighting
        2. A demonstrated reduction in total annual energy and power costs related to the installation of building envelope
        3. A demonstrated reduction in total annual energy and power costs related to the installation of heating, cooling, ventilation, and hot water systems as compared to a reference building, which meets the minimum requirements of ASHRAE Standard 90.1

        How much is the deduction?

        2022 or earlier

        Up to $1.88 per square ft

        2023 and forward

        Up to $5.00 per square ft

        Leyton’s Steps for Success

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          Carry out a feasibility study to determine the likelihood of qualification

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          Develop an energy model of the building using DOE-approved software

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          Engage a licensed Professional Engineer for a site inspection to validate energy model

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          Professional Engineer provides a certification that systems meet requirements of §179D

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          Prepare a report summarizing all findings, results, and forms

        When can you claim the
        §179D Tax Deduction?

        §179D deductions can only be taken in the tax year that the building was placed into service. However, building owners can file Form 3115 to claim the IRC 179D deduction for buildings placed in service in prior tax years. Designers can look back 3 tax years to claim the deduction on amended returns.

        Tax Scenario §179D

        We visited an office building in California that had undergone a gut renovation. We were able to incorporate the existed building envelope into the IRS required energy model and the building was able to reach a full deduction.

        • Type of Property Industrial and Office Building
        • Size of Building 109,425 sq. ft.
        • Building Placed in Service 2022

        Tax Scenario §179D

        We visited a high school in Illinois that has recently updated their lighting and central boiler through a local bond update. In a one-hour inspection one of our in-house professional engineers was able to collect additional documentation and the property was able to reach a full tax deduction

        • Type of Property High School
        • Size of Building 279,352 sq. ft.
        • Building Placed in Service 2020

        Tax Scenario §179D

        We visited a new build county hospital in Arizona the building reached a full tax deduction. The onsite inspection by our in-house professional engineer took one hour

        • Type of Property Hospital
        • Size of Property 74,893 sq. ft.
        • Building Placed in Service 2021

        Tax Scenario §179D

        We visited a parking garage in North Carolina, and we were able to generate the interim lighting deduction for parking garages and our client received $253,908.23

        • Type of Building Parking Garage
        • Size of Building 416,243 sq. ft.
        • Building Placed in Service 2021

        Great People
        Define our Success

        Our team of Energy Efficiency Experts is comprised of dedicated Professional Engineers and Energy Consultants, all of whom are focused in helping businesses claim Energy Efficiency Incentives. Combined, our experts have conducted over 10,000 energy studies, including energy modeling, site inspections, and certifications of results.

        Mark Bacon, PE

        Practice Lead – Energy Efficiency

        Taylor Beamer, PE

        179D Engineering Manager

        Alex Ovalle

        Energy Modeling Manager

        Cedric James

        Senior Project Manager

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        Our in-house team of highly experienced scientists, engineers, tax consultants and attorneys would love to answer all your questions and support your compliance.

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