As with any type of government program there are standards or qualifications that all buildings must meet to be eligible for the IRS Section 179 deduction. For some building owners and leaseholders there may be some areas where the standards of the Energy Policy Act of 2005 are more than a bit difficult to decipher. Working with a professional company that can handle all your EPAct 2005 179D Tax Deduction Certifications, evaluations and documentation will make your life much easier.
Types of Buildings and Options
The IRS Section 179 deduction is open to commercial and industrial buildings, but not the industrial processing system or equipment used for manufacturing or industrial purposes, multifamily dwellings 4 or more stories above grade as well as unconditioned attached to detached garages that meet the criteria.
Buildings that are eligible for the IRS Section 179 deduction must use electricity or fossil fuel as their power source and the building cannot be tax exempt. Examples of tax exempt buildings may be buildings that are used for religious purposes or buildings that are part of non-profit organizations.
However, it can be a building that has been converted to commercial or industrial use from another use and it can also be a retrofit project or a new construction project. One common question is about the scope of the application as it applies to the building. It is not possible to apply for the IRS Section 179 deduction for just part of a building; you will need to apply for the deduction for the entire building.
Professionals, Documentation and Certifications
It is important to realize that a licensed professional in the jurisdiction of the actual location of the building has to complete all required documentation. In some cases a person that is not specifically qualified and approved but that has the knowledge, skills and professional training to complete the evaluation can the analysis. In this case a licensed professional will need to review, verify and sign off on the documentation prior to it being submitted.
In general the professional that is approved and licensed to complete the necessary documentation will either be a licensed contractor or a professional engineer. In addition it is required than the professional completing the certification for the IRS Section 179 deduction and the applicant are not related.
