179D Reform

September 23, 2013

Section 179D of the Internal Revenue Code encourages increased energy efficiency efforts in commercial and large multifamily properties.  The 179D tax deduction wills expire on December 31 of this year unless extended.  The 179D deduction provides a one-time accelerated depreciated for commercial, large multifamily, and agency-owned properties.  Those who qualify, including owners of energy efficient commercial or large multifamily buildings built or retrofitted since December 31, 2005 and architects and engineers of energy efficient municipal buildings (LEED certified for example), would be able to save $1.80 per square foot in tax deductions.

An extension will allow this key incentive to raise large amounts of private investment capital in these properties.  Construction and manufacturing jobs will be created due to retrofitting projects.  The deduction will also save billions of dollars in energy costs for larger properties, something that plagues many commercial and larger multifamily property owners and managers. 

IREM joined a coalition of nearly fifty stakeholders to urge legislators to extend this critical tax deduction.  A coalition letter was sent to the Senate’s Committee on Finance leadership, and to the House’s Ways and Means Committee leadership urging the passage of the Commercial Building Modernization Act (S. 3591).  The letter also encouraged legislators to consider the extension as a part of the tax code’s possible overhaul in coming months.

IREM will continue to monitor the developments with the 179D tax deduction and will report back when necessary.