Raleigh Apartment Development Section 179D Deduction

Approach & Results

Client Profile
The client developed a new apartment complex in Raleigh, North Carolina. As part of the construction closeout process, the property owner engaged McGuire Sponsel to evaluate the development’s eligibility for the Section 179D Energy-Efficient Commercial Building Deduction.

Process
McGuire Sponsel’s Fixed Asset Services team began with a preliminary feasibility analysis to determine whether the property was likely to qualify for the deduction. After confirming its potential eligibility, the team conducted detailed energy modeling and evaluated the building’s qualifying systems against the applicable energy-efficiency standards.

The modeling demonstrated that the property achieved 53.38% energy savings, qualifying the development for the maximum deduction rate available under Section 179D.

Our team also reviewed the project’s construction timeline and costs. Because more than 5% of the construction hard costs had been incurred before January 29, 2023, the project satisfied the applicable construction-start transition rule. This allowed the deduction rate to increase from $1.13 to $5.65 per square foot without requiring the project to independently satisfy the prevailing wage and apprenticeship requirements.

Following a one-week proposal process, the final certified study was completed within four to six weeks of engagement.

Study Results
The completed Section 179D study generated a deduction of $535,636 for the apartment development. By combining detailed energy modeling with a careful review of the construction timeline, McGuire Sponsel helped the client secure the maximum available deduction for the property.