Energy Efficiency Tax Incentives Extenders Update

by Austin Bewley, EIT, Engineering Associate of BRAYN Consulting

January 12th, 2021

Congress just made some significant changes to two of our favorite energy-efficient incentives as part of the recent omnibus bill passed at the end of 2020. The New Energy Efficient Home Credit (45L) has been extended in its current form through the end of 2021. The Energy Efficient Commercial Buildings Deduction (179D) is now a permanent tax incentive!

45L

The extension of The New Energy Efficient Home Credit (45L) through the end of 2021 is GREAT NEWS for Homebuilders and Apartment Developers. 45L is a federal tax credit of $2,000 PER Unit that meets the energy-efficient standards.

There is an additional benefit for Homebuilders: 45L studies require an inspection of a percentage of the qualified units. Since 45L has been extended through the end of next year, developers can now get ahead of the game by scheduling inspections for their units BEFORE they are sold. This is a great time to investigate potentially HUGE savings on projects that were recently completed or are close to completion. If you or your clients plan to sell a new development this year, then 45L is a great way to secure additional value from your project.

179D

The Energy Efficient Commercial Building Deduction (179D) is a federal tax deduction that grants up to $1.80 per Square Foot for buildings that meet certain energy efficiency standards. The deduction is eligible to Commercial Property Owners and Qualified Designers that performed work on government-owned properties.

179D is now a permanent tax incentive and will no longer need to be extended by Congress! Historically, 179D had been an extenders incentive, meaning that it had to be extended, often retroactively, by Congress. Now that it is a permanent incentive, property owners and qualified designers will be able to plan into the future without worrying if 179D would even be available for timely filing or whether it would be available at all. Now that 179D is permanent, taxpayers can look for more guidance to be released by the IRS and a potential expansion of both the tax benefit and the type of work that qualifies. Additionally, the IRS will adjust the deduction amount to account for inflation and update the energy standards regularly.

This is excellent news for commercial property owners and government contractors. If your company has performed qualified work on a government building, like a school or public university, then a qualified government representative can allocate the deduction to your company. This is an ideal time to secure an allocation letter to lock down potentially hundreds of thousands of dollars in deductions for projects to be completed in 2021 and beyond. Your chances of securing an allocation letter from your government client during construction are much greater than your chances of securing one years after the fact.

If you are interested in either of these incentives, then look no further than BRAYN Consulting! BRAYN has a team of experienced engineers who have completed hundreds of 179D and 45L studies. We perform our own site inspections and can even help secure allocation letters for government-owned buildings. At BRAYN, we work to combine our thorough knowledge of the tax code with our engineering staff’s technical expertise. We are known for our quality customer service and our knowledge of the architecture and engineering industries.

Make sure to reach out to get your FREE Phase 1 estimate or competitive bid today. We offer fixed-fees for engagements. Contact us today at 888.773.8356 ext. 700 or brady@brayn.com.

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BRAYN Consulting, LLC

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