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 deduction provides a deduction of up to $5.00/SF for taxpayers meeting specific energy-efficient building requirements. Residential property includes a wide variety of categories including high rise towers, multi-use properties, dormitories, and 4 stories or higher apartment buildings
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 $5.00/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
Residential
Number of Floors
4
Area (SF)
37,276
Location
Seattle, Washington
Building Envelope
Fiber-Cement Panel Siding with R-21 Batt Insulation
Ply Roofing Membrane with R-38 High Density Batt Insulation
Low-E Glazing
HVAC
Electric Heaters in Living Units
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 an IRS approved software. The proposed building energy costs were compared to the ASHRAE 90.1-2007 reference building.
The engineering team thoroughly evaluates various qualifying methods (full building qualification, 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 minimum 25% savings to $0.60/SF at 40% or more 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.
HVAC and the building envelope are typically not relevant to garages since they are often exposed, unconditioned attached or detached spaces; however, IRS Notice 2008-40 states that an enclosed garage space falls under the Interim Lighting Rule. Energy efficient lighting alone can help achieve a substantial deduction. The large square footage of parking garages and their low levels of lighting make them outstanding candidates. The subject building’s 14,087 square foot parking garage qualified under the Interim Lighting Rule.
The certification process provides flexibility to select a custom combination of measures for each home that is equivalent in performance to the minimum requirements of the ENERGY STAR Reference Design Home, as assessed through energy modeling.
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