Legislation Update: 179D and 45L Extension

On Thursday December 19th the Senate passed a long awaited bill on Tax Extenders. While this bill does not include fixes to the Tax Cuts and Jobs Act, it does include an extension to 179D and 45L. Both of these provisions have been expired since the end of 2017 and are now extended through 2020.

179D, or the Energy Efficient Building Deduction, is a deduction of up to $1.80/sf for the installation of energy efficient systems into new or existing buildings. This deduction was first enacted as a temporary measure under the Energy Policy Act of 2005, and was extended every year until it expired at the end of 2017. Under this extenders bill the deduction is retroactively extended for tax years 2018, 2019 and 2020. This means that qualified buildings placed in service in 2018, and 2019 can now receive this deduction.

Additionally, in the case of Government owned buildings, the deduction is transferable to the person or company responsible for the energy efficient design. This means that architecture and engineering firms that design government owned buildings, can often get this deduction transferred to them. Since the design firm does not have a depreciable basis, the deduction becomes a permanent tax savings. In order to transfer the deduction additional steps are required, including getting an allocation letter from the owner. McGuire Sponsel can help CPA firms and their clients on the necessary steps to take this deduction.

Over the coming weeks McGuire Sponsel will work to provide our clients with more information on this and other tax provisions. However, please do not hesitate to reach out with any questions about this extenders bill.