The 115th Congress will begin today at noon. Based on my conversations with our elected representatives, once the new Congress is in session the extension of the 179d tax deduction will be considered. To recap, Section 179d is a tax deduction for energy efficient buildings, but it expired on December 31, 2016. Let’s take a look at some of the bills that have currently been proposed in the House and what affect they would have on 179d.
H.R. 6360 and H.R. 6361 are both proposed as simple extensions of the law. H.R. 6360 simply replaces the text “December 31, 2016” with “December 31, 2017” effectively extending the law for one year. H.R. 6361 similarly replaces “December 31, 2016” with “December 31, 2018” extending the law for two years. Both versions of the extension bill were introduced into the House Ways and Means Committee by Rep. Alan Grayson (D-FL) on November 17, 2016.
H.R. 6376 seeks to allow more types of buildings and owners to take the deduction. Currently, government-owned buildings can allow the design team to take the deduction but a private non-profit could not. This bill allows the deduction to be assigned to the design team for any “property owned by a Federal, State, local, or Indian tribal government, or a political subdivision thereof, or by an organization that is described in section 501(c)(3) and exempt from tax under section 501(a).” Additionally, only multifamily buildings below four stories were not allowed to qualify. This bill adds multifamily buildings (with an exception for qualified low-income buildings) to the list of properties that can be qualified. H.R. 6376 was introduced into the House Ways and Means Committee on November 17, 2016 by Rep. David Reichert (R-WA) and has three co-sponsors with bi-partisan support.
Both of these efforts are a good move for 179d. My preference is for a permanent extension, but I’ll obviously take the two year extension over the one year extension if given a choice. The expansion to non-profits and multifamily buildings will open up opportunities for additional building savings and be a further incentive for design teams to design higher efficient buildings. We’ll keep our eye on further developments in the extension of 179d and publish any updates here at our website. If you have any questions about 179d or have a building you think may be a good fit for the deduction, please don’t hesitate to contact us.