House Reaches Deal to Renew the Expired Tax Incentives Known as the Tax Extenders, Includes 179D and 45L

House Reaches Deal to Renew the Expired Tax Incentives Known as the Tax Extenders, Includes 179D and 45L

December 20, 2019 Update: The Senate voted to extend EPAct 45L/179D. The bill now moves to the President who said he would sign it.

 

Author: Alexander Bagne, JD, CPA, MBA, CCSP

Lawmakers negotiating a year end budget bill reached agreement on December 16 to include tax extenders, which the House passed on December 17th. The Senate is expected to follow by the December 20 deadline to keep the government open. President Trump stated he has agreed to sign the measures. The §179D Energy Efficient Commercial Building Deduction and the §45L Energy Efficient Home Credit were among two incentives to be extended. The draft of the law, which is contained in the “Further Consolidated Appropriations Act, 2020“, will extend these incentives through the end of 2020 without any other changes.

THE §179D AND §45L ENERGY EFFICIENCY TAX INCENTIVES

The §179D Deduction is a Federal tax incentive promoting energy efficient buildings for both new and existing structures. Further, architects, engineers, contractors, environmental consultants or energy services providers may also be eligible for the incentive on public projects. This incentive is often referred to as the EPAct Deduction after the Energy Policy Act of 2005 that created it, or as the §179D Deduction, which relates to its tax code section. Commercial building owners can take a Federal tax deduction of up to $1.80 per square foot of the building’s floor area if they install certain property (e.g., efficient lights or HVAC systems, added wall or roof insulation, etc.) that reduces energy and power costs. The §179D Deduction applied to both new construction and renovations completed between 2006 through 2017.

The §45L Credit allows eligible developers to claim a $2,000 tax credit for each newly constructed or substantially reconstructed qualifying residence. It applies to single family homes, apartments, condominiums, assisted living homes, student housing, and other types of residences. The residences must not be more than three stories above grade in height. Like the §179D Deduction, this incentive expired in 2017.

While both incentives lapsed since the end of 2017, these two incentives encourage sustainable construction practices as well as stimulate the economy and create jobs. ICS Tax is both excited and enthusiastic about this news.

HOW WE CAN HELP

While many buildings and homes qualify for these incentives, very few taxpayers are taking the steps necessary to claim them. ICS can provide a free analysis to determine if these incentives are feasible, and if so, provide the necessary third-party certifications and other assistance to benefit from it. For a free consultation, please contact an ICS Tax representative.

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ICS Tax, LLC (ICS) is a consulting firm providing innovative tax planning strategies. ICS collaborates with taxpayers and their tax professionals to identify credits and incentives that reduce tax liabilities and increase profitability. ICS provides nationwide service through its offices throughout the country.