Click here to schedule a FREE Green Building 179D CPE at your location
Benefits of Green Building:
The goal of Green Building is to lessen the impact of a structure on the environment while improving the quality of life for its occupants. Some benefits are easy to economically quantify, such as reduced water and energy consumption. Often, the savings from these features over the life of the building will more than pay for the initial cost. Improved occupant health, increased productivity, reduced storm-water runoff and the use of recycled and sustainably harvested products are more difficult to assess financially. Since not all Green Buildings need to be built to the same level of certification, it is possible to construct a legitimate Green Building at little or no additional cost.
What is the Green Building 179D Tax Deduction?
The Energy Policy Act of 2005 added section 179D to the Internal Revenue Code. Section 179D permits a deduction for the costs of installing certain energy efficient building systems in commercial buildings.
To claim the deduction, a taxpayer must receive certification of energy savings from a qualified individual (unrelated licensed professional engineer or contractor) who performs a field inspection of the building using qualified software from the Treasury Department's list of certified software to calculate the energy savings and then presents the qualification in writing. Certification for Code section 179D only determines whether the deduction is available. The certification process does not involve determining the cost of the qualifying energy efficient property. A cost segregation study ensures that the amount of the deduction does not exceed the amount of energy efficient property.
Green Building 179D Energy Efficiency Tax Deductions:
You may be eligible for a tax deduction of up to $1.80 per square foot for improving the energy efficiency of your existing commercial buildings or designing high efficiency into new buildings. The Energy Policy Act of 2005 includes a tax deduction for investments in “energy efficient commercial building property” designed to significantly reduce the heating, cooling, water heating, and interior lighting energy cost of new or existing commercial buildings.
Because the Code section 179D deduction applies to new buildings that meet certain energy savings targets and requires the involvement of licensed engineers or contractors, you may not have known where to turn to for help with this new deduction. You can turn to the professional staff at SourceCorp Professional Services for help in determining whether your clients qualify for this new deduction.
The SourceCorp Green Building 179D Energy Efficiency Service team is comprised of full-time, highly experienced and uniquely qualified professionals. We can help maximize your deductions and limit your exposure.
Why SourceCorp Green Building Professionals:
SourceCorp Green Building Study Process/Overview:
After preliminarily reviewing the specifications, we determine whether the building would qualify in whole or in part. After obtaining any necessary licenses in the building’s local jurisdiction, a professional engineer would perform the energy modeling and analysis and schedule a site visit. The energy modeling may not occur until after the site visit depending on the level of detail available in the plans. Detail is frequently lacking in situations where the taxpayer acted as its own general contractor. Regardless, during the site visit, our engineer would follow the NREL standard guides and checklists to verify that the property meets the energy savings targets and gather any additional information not included in the plans.
We then finalize the section 179D study and provide the building owner with an overview of the energy saving features.
After we provide the certification of the qualifying energy efficient property, our specialized cost segregation team become involved in the process. The certification process for Code section 179D only determines whether the deduction is available. The certification process does not involve determining the cost of the qualifying energy efficient property. Our cost segregation team will:
Our cost segregation team determines the cost basis of the qualifying property and determines the applicable cap on the deduction.
Where possible, the engineer that performs the site visit will also be able to perform the cost segregation analysis of the building. In some situations, the engineer may work in tandem with another cost segregation consultant on larger or unusual properties. Alternatively, your client’s in-house contractor or professional engineer may be able to perform the site visit and then we could send only a cost segregation consultant for a site visit. After finalizing the cost segregation report, we will ship a hardcopy of our comprehensive cost segregation report and the section 179D study to your client.
Audit Support
Under our standard agreement, we provide 40 hours of audit support. We anticipate that the section 179D study will involve a minimal level of audit support because we can provide the agent with the study and discuss any questions the agent might have. As necessary, we would file a Form 8821 to be able to discuss the study with the agent. If the combined section 179D study and cost segregation report require additional audit support, we can file a Form 2848 and work with you on providing the best audit defense for your client.
Click here to schedule a FREE Green Building 179D CPE at your location
