Section 179D, the energy-efficient commercial building deduction, allows a commercial building owner or designer of tax-exempt buildings to claim up to $5 per square foot for installing energy-efficient equipment into their buildings. The newly installed equipment must be a part of the following three systems.
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- Heating, Ventilation, and Air Conditioning (HVAC) and Hot Water
- Interior Lighting
- Building Envelope
But what types of equipment included in a renovation or new construction project are good candidates for a Section 179D study? Below are the three systems and examples of eligible equipment for Section 179D.
Heating, Ventilation, and Air Conditioning (HVAC) and Hot Water
The HVAC system uses various equipment to control the indoor and enclosed space’s temperature, thermal comfort, and indoor air quality. An HVAC system can provide heating, cooling, or a combination of both. The hot water system delivers water to various plumbing fixtures throughout the building. Below are some examples of HVAC and hot water equipment that can be analyzed in a Section 179D study.
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- Boilers
- Building Management or Automated Controls System (BMS or BAS)
- Chillers
- Condensing Units
- Cooling Towers
- Fan Coil Units (FCUs)
- Pumps
- Rooftop Units
- Split-Systems
- Tankless Water Heaters
- Unit Heaters
- Variable Air Volume (VAV) Systems
- Variable Frequency Drives (VFDs)
- Variable Refrigerant Flow (VRF) Systems
- Variable Refrigerant Volume (VRV) Systems
- Water, Air, or Ground Source Heat Pumps
Interior Lighting
The interior lighting system refers to any lighting fixtures permanently installed in the building and intended to provide illumination for the selected location. Exterior lighting and fixtures not permanently installed, such as a floor lamp, are not considered for Section 179D. Below are examples of interior lighting equipment that can be analyzed in a Section 179D study.
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- Bi-Level Switching Systems
- Building Management or Automated Controls System (BMS or BAS)
- Compact Fluorescent Lighting
- Daylight Harvesting Systems
- Dimming Controls
- Halogen Lighting
- Incandescent Lighting
- LED Lighting
- Occupancy and Vacancy Sensors
- Standard Fluorescent Lighting
- T5 or T8 Fluorescent Lighting Fixtures
Building Envelope
The building envelope is comprised of the systems that act as a physical separator between the interior of the building and the outdoors. The major systems that make up the building envelope include the foundation, wall system, roof system, doors, and windows. Below are examples of building envelope equipment and materials that can be analyzed in a Section 179D study.
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- Batt Insulation
- Double or Triple Pane Windows
- EPDM Roofing System
- Foam Board or Rigid Insulation
- Glazed or Low-E Windows
- Insulated Windows and Doors
- Insulating Concrete Forms
- Metal Roofing
- Permanent Sunshades
- Slab or Foundation Insulation
- Spray-Foam Insulation
- Structural Insulated Panels
- Tile Roofing
- TPO Roofing System
- White or Reflective Roofing
Contact us
If you are a building owner or designer that has completed a project that includes any of the above systems, you may be missing out on these valuable tax incentives. Calvetti Ferguson will provide a free assessment of your projects to determine if they are eligible for the Section 179D incentive. If you are interested in learning more, please fill out our contact form below.