Wondering if Your Building Improvements Qualify for a 179D Tax Deduction?

In past posts, we’ve discussed the three main categories of building improvements that may qualify for a 179D tax deduction: Building envelope, HVAC, and lighting.

Deductions of $0.60 per square foot are available for each category. The maximum deduction, $1.80 per square foot, can be achieved by reducing overall energy costs of a building by 50%. We tend to consider lighting to be the ‘low hanging fruit’ with respect to 179D deductions, but if you’re replacing your HVAC unit you should know there are 12 specific types of upgrades that almost always qualify for an upfront deduction. Your business may be eligible for significant tax savings if your project fits one of the following descriptions:

  1. Geothermal (ground source heat pumps)
  2. Thermal Storage
  3. High-efficiency VRF units in apartments, dorms and hotels
  4. Centralized HVAC in apartments, dorms and hotels
  5. Energy recovery ventilation
  6. Demand control ventilation
  7. Chillers in buildings of less than 150,000 square feet
  8. Direct fired heaters in warehouse, industrial and other spaces with no air conditioning
  9. VAV devices in buildings of less than 75,000 square feet
  10. Chilled Beam Ceilings
  11. Magnetic bearing chillers
  12. Gas fired chillers combined with electric chillers to peak shave