The Tax Deduction to Watch

Governments at all levels are making an effort to offer credits, rebates, and other incentives for energy efficient buildings. The U.S. Senate is in the midst of a battle to extend one very important provision, which offers up to $1.80 deduction per square foot for new construction and renovations.

In a recent blog post for The Hill, former U.S. Congressman/Chairman of the IRS Oversight Committee and alliant group Senior Advisor, Jim Ramstad and former U.S. Congressman and alliantgroup Director, Rick Lazio wrote about tax provision Section 179D. Section 179D – Energy Efficient Commercial Buildings, is impressive.

“A tax provision with bipartisan support that creates jobs, strengthens energy independence, encourages innovation and reduces the burden on taxpayers – in short, as close to a wonder provision as you can get in the tax code.”

Section 179D rewards builders for energy efficiency by offering deductions for energy efficient buildings that surpass industry standards in any three areas including building envelope, HVAC systems, and lighting. Verifications of energy savings is to be determined by a licensed engineer. Ramstad and Lazio note that there are provisions as to how the energy savings should be achieved.

“A key provision, 179D is technology neutral. Congress didn’t direct how energy efficiency should be achieved; 179D just rewards success.”

Federal, state and local government affiliated entities such as public schools and universities can pass their tax deductions on to the designer of the building.

Here’s the catch. Section 179D expired December 31, 2013 along with 610 other provisions. The Senate Finance Committee has voted to extend the provision and it now awaits approval by the Senate and the House of Representatives.

Be sure to check out Energy.gov for information on financial options offered by the federal government in your area.