Building Owners: if you started construction on a new building in 2021 or 2022 and it got completed in 2023 or 2024, it’s quite probable that it might qualify for up to $5/SF 179D Energy Efficiency Tax Deduction. This is what we call a sweet spot. Others migth call it a loophole. There’s a gap in the tax code so that you don’t have to qualify for the new highly restrictive apprenticeship rules or the prevailing wage rules.

If your building is 40,000 SF it might qualify. All kinds of buildings might qualify…strip centers, industrial, office, multi-family 4 stories or more, senior housing, student housing etc. If a public building was built or a non-profit (i.e. church, YMCA, school, library etc) this deduction might be able to be taken by one of the design firms. This is one of the craziest tax deductions in the history of mankind so you should check it out if you are a designer or architect.

What does this translate into? Well, let’s say you built a 50,000 SF industrial building / flex building. If you get $5/SF that’s a $250,000 tax deduction. The other point is this comes off the 39 year class life line…we’re all used to taking the 5 and 15 year life but this is 39 year. It’s a BIG DEAL.

Here’s the other qualifier…you have to be the one who built this or had it built by a contractor. This does not work if a developer built a spec building and immediately sold it. The deduction doesn’t work for the developer and it doesn’t work for the next owner. So if you are building and developing for your own use or investment, this is an incredible deduction for you. How many people are taking this deduction? Not a lot.

Let me know if you have a building and would like us to evaluate it. We study these kinds of properties like with do with cost segregation.
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John Murphy CSSI