Heads up! Some hot tax breaks have been extended until the end of 2020.
Back in December 2019, a $1.4 trillion spending package was signed into law. The spending package averted a government shutdown, making front-page news. Other elements of the package were overshadowed by the lead story. Less was said, for example, about the extension of some energy-efficiency tax breaks that originally expired at the end of 2017 and have now been extended through 2020.
179D tax deduction is an energy-efficiency incentive for commercial building owners. Eligible properties include certain apartment buildings and other larger residential buildings, both existing properties and new construction.
179D offers tax savings of up to $1.80 per square foot for qualifying energy efficiency measures (including high R-Value insulation and roofing, windows, doors, and/or HVAC systems).
These tax deductions are unusual in that they’re not based on the amount spent on a project; rather, they’re based on the square footage affected.
Retroactive AND Proactive
179D expired in December 2017. But an extension through 2020 means your energy-efficiency projects from 2018 and 2019 are retroactively eligible, and new 2020 projects are proactively eligible.
Requirements include the property saving at least 50% of the heating and cooling energy as compared to ASHRAE Standard 90.1-2007 (or 90.1-2001 for buildings or systems placed in service before January 1, 2018). It includes (1) installing interior lighting; (2) building envelope, or (3) heating, cooling, ventilation, or hot water systems.
45L is a tax credit of $2,000 per residential unit or dwelling, available to the developers of energy-efficient buildings. Qualifying properties include apartments, condominiums, townhouses, and single-family homes.
The credit is available to any eligible contractor who constructed or substantially rehabilitated an energy-efficient residential dwelling unit in the United States that was used by the owner in a qualifying tax year. There are stated energy-efficient levels to be met, and there is a certification process required.
If your project is either new construction or rehab, it’s worth your time to check out the 45L incentive and the certification process.
Are you interested in the 179D or 45L tax extenders? Don’t wait; there’s no guarantee that these incentives will continue beyond 2020.
If you’re interested in qualifying for these, Telkonet’s energy management platform can save up to 45% on energy bills for properties like MDU’s, hotels, and senior living facilities. To learn more, contact us.