The Energy Policy Act of 2005 is what created the option for the 179D tax credit. It is available to commercial businesses, contractors and architects that are involved in renovating or new building construction for buildings that meet the energy efficiency requirements outlined in the Act.
The actual 179D tax credit can be substantial, so it is to your advantage as a contractor, engineer, architect or building owner to be aware of how to qualify for the tax deduction that many businesses and professional simply fail to realize is available for them. In addition, even if the building is not fully compliant with the ACT, which includes the 2001 ASHRAE (American Society of Heating, Refrigerating and Air Conditioning Engineers) standards, there may be the option to claim a partial credit as well.
Options to Consider
There are a variety of subsystems or options that a new building or a renovation or upgrade of a commercial building can take advantage of the 179D tax credit. The three major subsystems that are considered under the Act for the credit include the interior lighting systems, heat and air-conditioning systems, and the actual building itself.
What Is A Building?
With regards to the 179D tax credit the definition of a building is actually very general and not at all narrow or specific. To qualify for the tax credit the building has to be in commercial use or it can be a parking garage, multi-family housing units of more than 4 stories, factories, warehouses or state, local or federal facilities.
These local, state or federal buildings that could qualify for a 179D tax credit can include buildings such as schools, colleges or universities, airport terminals, municipal buildings, prisons, courthouses and so on.
It is important to understand that the 179D tax credit is not automatically provided and it has to be applied for with verification. The government requires that an independent certification of the energy efficient design of the building has to be submitted, along with confirmation and certifications from an engineer. It is essential to ensure that all necessary documentation be submitted to obtain the 179D tax credit for the business or commercial building.
