What?
Section 179D, the Energy Efficient Commercial Buildings Deduction, was made permanent by a law signed on December 28, 2020. This tax provision allows commercial building owners who improve their building’s energy efficiency to receive a deduction of as much as $5.65 per square foot.
When?
The building upgrade went into service in 2024. The deduction is available for new construction and retrofits.
Facts About Efficiency
Commercial properties account for 17% of annual energy consumption in the US.
Estimates suggest 30% of energy consumed by commercial buildings is wasted on unnecessary consumption.
How?
The building owner gets the flexibility to choose within the building systems how they accomplish conserving or reducing energy. Repairs could be to the building envelope, HVAC system, hot water, or lighting. The deduction does not favor any particular method of conserving or reducing energy.
Why?
Building upgrades that reduce energy consumption ultimately save the owner and tenant money. The upfits can make the property more attractive to new tenants or encourage existing tenants to stay in the property. Making a property more efficient helps retain value as it ages.
5.9 Million
Estimated commercial buildings in the US, 2018
$140 Billion
2018 Cost of energy for
US commercial buildings
Information from the National Association of Realtors & Center for Sustainable Systems, University of Michigan
