planning

Energy Efficiency Tax Incentives Renewed

On Friday, December 20th, President Trump signed and enacted a $1.4 trillion spending package that funds the government for the 2020 fiscal year, averting a second government shutdown for 2019. Included in the spending bills are numerous tax extenders, including many that had originally expired at the end of 2017. Among these tax breaks are various provisions for energy related tax credits and incentives.

Key energy tax provisions impacting the construction and real estate industry include the following:

179D Analysis

  • Retroactively extended for 2018-2020.
  • Section 179D allows for immediate deduction for energy-efficient commercial property up to a maximum of $1.80 per square foot. This deduction can pass on to architects and designers who design efficient government buildings as well.

45L Credits

  • Retroactively extended for 2018-2020.
  • The 45L tax credit is a provision under the Internal Revenue code that allows owners of energy efficient residential buildings to receive up to a $2,000 tax credit for each new or rehabbed dwelling unit. This provision can provide major savings for real estate owners—particularly those owning certain apartment buildings and other larger residential buildings.

Keep in mind that these extenders can be a complex matter when it comes to eligibility. With almost a 2-year lapse in the 45L tax credits, pursuing tax credits for a 2018 tax year will require amending a 2018 return. Likewise, designers pursuing 179D tax deductions for 2018 will also need to amend. Therefore, if you have any questions, please contact your KatzAbosch representative or contact us.

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