Accelerating Deductions with Section 179D and Cost Segregation
September 9, 2024
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The Section 179D Energy Efficient Commercial Building Deduction (Section 179D) and cost segregation studies can help commercial building owners save significantly on taxes. Section 179D provides a tax deduction for new construction and renovations to the HVAC, interior lighting and building envelope, while cost segregation studies help identify assets with shorter depreciable lives. When paired together, Section 179D and a cost segregation study create the best opportunity for building owners to maximize tax savings and increase cash flow by identifying and accelerating depreciation on energy-efficient assets.
The expansion of the Section 179D deduction through the Inflation Reduction Act (IRA) offers even more incentives for building owners, architects, engineers and design-build contractors who create technical specifications before and during the construction process. Utilizing these options can significantly reduce a building owner’s tax liability and improve cash flow. Cost segregation studies analyze the parts of a commercial building to identify assets with shorter depreciable lives allowing owners to accelerate their depreciation deductions and reduce taxable income.
In this Tax Beat episode, Brooks Nelson, Tax Partner and Sarah McGregor, Tax Director, are joined by Glenn LeMieux, Tax Credits & Incentives Advisory Director, and Andre Kohn, Tax Credits & Incentives Advisory Senior Associate. Together they discuss federal tax credits and incentives related to clean energy, energy-efficient buildings and cost segregation opportunities.
Listen to learn more about:
- 03:28 – Cost segregation study background
- 07:02 – Applications of cost segregation
- 08:52 – Cost segregation study process
- 10:42 – Section 179D background
- 14:57 – Qualifying for Section 179D
- 17:01 – Energy-efficient improvements
- 18:58 – Prevailing wage updates
- 23:51 – Strong candidates for these incentives
- 27:20 – Combining Section 179D and cost segregation
Related Guidance
- Article – Designing for Efficiency: How the 179D Tax Deduction Benefits A&E Firms and the Environment
- Podcast – 179D Energy-Efficient Commercial Buildings Deduction for Not-for-Profits
- Webinar Recording – Maximize Tax Savings Through Cost Segregation, Section 179D, and Section 45L Approach and Client Success Stories
- Article – Factors to Consider When Seeking Cost Segregation and Section 179D Study Service Providers
