IRC § 179D, the energy-efficient commercial buildings tax deduction or simply the Section 179D deduction, was enacted as part of the Energy Policy Act of 2005.1 The provision encourages building owners to promote energy savings in new and remodeled buildings by providing an immediate tax deduction for costs incurred that reduce a building’s energy consumption. As of this writing, IRC § 179D applies to qualifying property installed on or before December 31, 2016.
What Is Energy-Efficient Property?
Energy-efficient building property is installed to a building in the U.S.2 for which depreciation or amortization is allowable.3 To qualify, the property must be installed as part of the interior lighting systems; hot water systems; heating, ventilation, and air conditioning (HVAC) systems; or the building envelope.4