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Cost Segregation

179D EPAct & 45L

Tax Credits

 179D EPAct

The Energy Policy Act of 2005 ("EPAct 2005") established new federal tax deductions for all qualifying investment cost in commercial buildings that improves the energy efficiency of the whole building or for each of three building subsystems: lighting and lighting controls; HVAC/Hot Water; and the building envelope (defined as the perimeter of the building including roof, walls, windows, doors and flooring systems.). To qualify, a project (the whole building or subsystem) must reduce energy use by set percentages versus a baseline standard for energy efficiency published by the American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE 90.1-2001). The amount of available federal tax deduction depends on the efficiency of the system. Federal tax deductions are available for both newly constructed buildings and retrofits of existing buildings placed in service from January 2006 through December 2013. This can be utilized as a partial deduction for each system as well. Example: lighting can qualify by itself for .60 cents a square foot.

45L Tax Credit

Eligible 45L Tax Credit Apartment Buildings & Condos:
A dwelling unit should provide a level of heating and cooling energy consumption that is significantly less than certain national energy standards. Based on current construction trends, many developments already exceed these standards. All residential built within the last 4 years are worth assessing for potential 45L tax credits. Eligible construction also includes substantial reconstruction and rehabilitation. Homebuilders and developers can still claim the 45L tax credit retroactively if they did not claim them on previous tax returns. This is an important incentive for both developers and home builders.

The following types of projects should be considered:

• Affordable housing (LIHTC)
• Apartment buildings
• Assisted living housing
• Production home developments
• Residential condominiums
• Student housing
• Substantial reconstruction or rehabilitation

The Process
The basis for developing and supporting the 45L tax credit is a detailed energy analysis that must be certified by a qualified third-party. Our multi-disciplinary team of engineers and tax experts will ensure that you obtain the maximum tax credits and provide all the documentation necessary to sustain an IRS audit. We use IRS approved software programs for the IRC Sec. 45L certification.