EPAct/179D and 45L Extended Retroactively as Part of the Bipartisan Budget Act of 2018

We’ve long been hoping to see the extension of EPAct 179D and 45L, as these incentives can be quite powerful, particularly for large properties.  Initially enacted in 2005, the incentives have been extended for one year here and two years there, most recently in the PATH Act of 2015.  The PATH Act extension allowed taxpayers to make a one-time deduction on qualified energy-efficient commercial building property placed-in-service between 1/1/2006 and 12/31/2016.

Until now. 

The President signed into law this morning the Bipartisan Budget Act of 2018. Part of the broad legislation is the retroactive enactment of the Section 179D and 45L programs. This extension is for 2017, meaning that projects completed and placed into service between the following dates will be eligible:

January 1, 2006 to December 31, 2017

This extension will be subject to the same parameters and limitations as those that applied to past extensions.  As before, properties eligible for the 179D deduction may be either commercial property or residential rental property at least 4 stories high.  New construction and renovation projects are both eligible.  Energy-efficient improvements may be made to interior lighting, HVAC, and/or building envelope assets, for a deduction of up to $1.80/SF of improved building space, and improvements must meet ASHRAE 90.1 2007 standards.  45L-eligibility is restricted to residential rental property with a maximum of 3 stories providing a $2000/unit tax credit for qualifying units.

Many clients may be able to take advantage of this news to get even more value out of their Capstan projects.  Obviously, there’s not too much time left before filing for TY 2017, but we’re at your service to help you maximize benefit on qualifying projects.  As in the past, taxpayers may use a 3115 to complete a look-back study on older properties.

The Capstan team is available to assist you in with any questions you might have and prepare proposals. Please contact Terri Johnson, Bruce Johnson or Carly Ferris.  We look forward to helping further maximize your 2017 tax savings.