alliantgroup published in Modern Contractor Solutions. Doing More With Less: The Power of the Energy-Efficient Building Incentive.


Doing more at a lower cost and with fewer resources is every business person’s challenge. When it comes to energy efficient building, not only do innovative new techniques ultimately save money and energy costs, they also help the environment. The 179D Tax Deduction is a valuable opportunity for architectural, construction, design, and engineering firms to contribute to the Nation’s energy efficiency goals, while increasing a company’s bottom line.

Section 179D of the Internal Revenue Code was enacted by Congress as part of its 2005 Energy Policy Act to encourage the energy-efficient design and construction of new or renovated properties. This legislation originated to reward commercial building owners for energy-efficient design. A few years later, during the economic downturn, it became apparent to Congress that the benefit had less value because the private industry was making fewer investments in new and remodeled buildings.

The 179D incentive was designed to benefit an industry that has sustained an enormous negative impact as a result of the faltering economy over the last few years. When government owners of buildings approved the allocation of this eco-friendly benefit to the private sector, it furthered the cause of energy conservation and helped to stimulate the American economy.

However, experts noted that the government continued to remodel and construct new properties as it is a non-tax paying entity and could not benefit from 179D. The tax code was subsequently amended to allow the government owner of new or remodeled building to allocate deductions to providers who were responsible for the energy efficiency of their property. Qualifying companies may receive a deduction of up to $1.80 per square foot for eligible projects placed into service and completed from 2009 (for calendar year-end firms) through 2013.

“What’s so fascinating about 179D is that it’s an incentive for a trend within the construction industry that almost all companies are already moving towards,” Dean Zerbe, former senior tax counsel to the Senate Finance Committee and alliantgroup’s national managing director, says. “It clearly makes sense to develop new environmentally friendly technology from both a financial aspect and to be more globally responsible. The government is keenly interested in these endeavors which is why they developed this deduction.”

Originally posted here: March 2013

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