$0.60/SF
for lighting systems meeting 25% savings
The 179D 2021 Energy Tax Deduction is a very specific deduction allowed for energy-efficient commercial buildings that were enacted as part of the Energy Policy Act of 2005. The engineered-based tax incentive is available for the reduction of energy and power costs in commercial buildings and allows for a tax deduction of up to $1.80 per square foot.
The 179D Tax Deduction specifically applies to those commercial buildings that significantly reduce their interior lighting costs or their HVAC and building envelope.
The deduction may be claimed for new construction or improvements placed into service after Jan. 1, 2006, for commercial building owners (a Change in Accounting Method may be used to retroactively take the deductions). Designers of government-owned buildings are able to take the IRS 179D tax deduction for all “open” tax years, which generally allows three years from the date of filing (buildings placed in service earlier than that require an amended return).
savings per square foot of improved space
Section 179D tax credit requires the taxpayer’s building to meet or exceed a 50% savings in energy and power costs when compared to a theoretical ASHRAE 90.1-2007 baseline building.
for lighting systems meeting 25% savings
for HVAC systems meeting 15% savings
for building envelope systems meeting 10% savings
Most tax preparers depreciate equipment and other building costs (such as parking lots and carpeting) at 5, 7, or 15 years. Veritax Advisors cost segregation specialists are able to identify costs that can’t be readily seen, such as the wiring and plumbing needed to run the equipment. We have found that our process results in identifying costs that can be reclassified as 5-year, 7-year, and 15-year recovery periods that typically exceed 200 percent to 500 percent of what an accountant alone can capture.
No. You only need to file IRS Form 3115 (Change of Accounting Method) that allows you to take the “catch-up” depreciation in the year you wish to apply the study. We can assist your CPA in completing this form and will provide the appropriate supporting schedules.
In all of our projects we prepare an initial detailed no-cost analysis to determine the benefits of doing a study. From this analysis we determine the cost of the study and then you can make a final decision whether a study would be beneficial to you. The study fee is 100 percent deductible and, from our experience, the benefit will be three to up to 25 times the cost of the study.
Contact Veritax Advisors today at tax@veritaxadvisors.com or call 8889393309 to request your no-cost estimate.
Yes, but it will take 27.5 or 39 years and you will miss the benefit of having additional cash flow to invest in your business now. With a cost segregation study, it is not unusual to generate $50,000-$200,000 of additional cash flow that is available to re-invest however you choose. The benefit will depend on the building complexity as well as the cost of the building.
Usually not. However, there are special rules that may apply in this situation and we can help you navigate those specific tax laws.
Book an introductory meeting with Veritax cost segregation expert Chris Ostler, CPA, to know more about cost segregation tax benefits along with getting introduced to the best cost segregation companies. We’ll get you started with a no-cost analysis to determine if the property is a good fit for a full study. No commitment is necessary.
We look forward to helping you serve your clients.
Have a question for Chris before booking? Reach out directly.
A. Chris Ostler, CPA