The owners of energy-efficient building property such as federal, state, or local governments (or a political subdivision thereof), may allocate the §179D tax deductions to the primary designer(s) of the building.
The primary designer is the person who creates the technical specifications for installation of energy-efficient commercial building property for a new building or addition/renovations to an existing building. Government property includes a wide variety of buildings such as public schools, universities, libraries, museums, convention centers, prisons, etc.
When most people think of §179D, residential real estate does not typically come to mind. Multifamily residential buildings, which are four stories or higher and that incorporate energy efficient designs, can qualify for the §179D tax deduction. This tax incentive provides a deduction of up to $1.80/SF for taxpayers meeting specific energy-efficient building requirements. Residential property includes a wide variety of categories such as high rise towers, multi-use properties, dormitories, and garden style complexes.
Property Type
School
Number of Floors
2
Area (SF)
93,185
Location
Austin, Texas
Building Envelope
CMU Wall with Gypsum Board
Insulated Metal Deck
Low-E Glazing
HVAC
Geothermal Water Source Heat Pump
Lighting
Energy Efficient LED; LPD – 0.51 W/SF
The Source Advisors §179D engineers were engaged to analyze and certify the building as per §179D guidelines. They reviewed the building’s envelope, interior lighting, HVAC, and service hot water systems and modeled them using IRS approved software. The proposed building energy costs were compared to the ASHRAE 90.1-2007 reference building.
The engineering team thoroughly evaluated various qualifying methods (full building qualifications, partial qualifications, and Interim Lighting Rule) to calculate the maximum tax deduction that the building would qualify for.
For the subject property opting for Interim Lighting, the tax deduction varies linearly from $0.30/SF at 25% savings to $0.60/SF at 40% savings. The report provides a complete and detailed description of our analysis, results, techniques, definitions, assumptions, and limiting conditions. Our results were based on information that was provided to us and includes, but is not limited to, drawings and specifications.
Based on the energy model and the site inspection, Source Advisors qualified the subject property for the envelope, HVAC and service hot water, and interior lighting systems.
The total area of the building is 93,185 square feet. The projected annual energy costs for the subject building using the methods prescribed by the IRS is $77,305. The projected annual energy costs for the ASHRAE Reference building is $173,259. The property achieved 55.4% savings (excluding the process loads) in annual energy costs.
The subject property qualified under the full building qualification for §179D tax deductions of $1.80/SF or $167,733.
Difference in Annual Energy
$95,954
Achieved Savings Over Reference
55.4%
§179D Tax Deductions $/SF
$1.80
§179D Tax Deductions
$167,733
