Energy Efficient Tax Incentives Extended Retroactively Through 2020

On December 29, 2019, the President signed into law a extender package which includes a retroactive extension of the 179D Energy-Efficient Commercial Buildings Deduction and the 45L Energy Efficient Home Credit. Both of these key energy tax provisions had expired at the end of 2017. This legislation reestablishes these provisions back to 1/1/2018 and extends them forward through 12/21/2020.

Properties eligible for the 179D deduction may be either commercial property or residential property at least four stories high. New construction and renovation projects may also qualify for the deduction. This deduction provides a tax benefit of up to $1.80 per square foot for buildings that reduce the total energy and power costs by at least 50%, as previously established by the ASHRAE 90.1 2007 standard. Energy efficient improvements made to building assets such as interior lighting, HVAC and envelope systems, can contribute to this benefit.

45L provides that residential building owners such as low-rise apartment developers or homebuilders, can qualify for a tex credit of $2,000 for each new or rehabbed energy efficient dwelling unit that is first leased or sold by the end of 2020. Eligibility is restricted to residential rental property with a maximum of 3 stories.

For the 2018 tax year, taxpayers may need to file amended tex returns to claim these benefits.