We’ve long been hoping to see the extension of EPAct 179D and 45L, as these energy incentives can be quite powerful, particularly for large properties. The President signed the tax extender package Further Consolidated Appropriations Act into law on Friday December 20th, 2019. This legislation reestablishes the Section 179D and 45L programs retroactively back to 1/1/2018 and extends them forward through 12/31/2020.
These programs were initially enacted as part of the 2005 Energy Policy Act to incentivize taxpayers to design and improve properties for better energy efficiency. The most recent program extension means that projects placed-in-service after 12/31/2005 and before 1/1/2021 may qualify for the incentives.
Properties eligible for the 179D deduction may be either commercial property or residential rental property at least four stories high. New construction and renovation projects are both eligible for this tax strategy. This is a one-time deduction benefit, and while it is best claimed in the year of construction, it can be claimed retroactively using a 3115 Change in Accounting Method.