The Modifications To The IRS Section 179D Deduction In 2012

by | Sep 17, 2014 | Money and Finance

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On April 23, 2012 the IRS provided a notice via an Internal Revenue Bulletin (2012-17) that made modifications to the existing IRS Section 179D deduction. In 2012 this modification was designed to provide additional options for building owners and taxpayers to use to qualify for the deduction.

The History

According to the Energy Tax Policy Act of 2005, also more simply known as the EPACT 2005, deductions and requirements for partial deductions in the categories of the buildings known as the building envelope, HVAC system and interior lighting were developed and implemented.

This included the requirement of a 50% or more reduction in the three areas as compared to a reference building that had the minimum standards set forth by Standard 90.1-2001. This standard was set by the American Society of Heating, Refrigerating and Air Conditioning Engineers as well as the Illuminating Engineering Society of North America.

There were changes made to this in 2008, which allowed a different calculation amount in determining eligibility for a partial deduction and also modifying the partial deduction to 20% for interior lighting and HVAC and 10% for the building envelope.

Changes Made in the IRS Section 179D Deduction 2012

The changes made to the IRS Section 179D deduction 2012 provide further calculation changes for taxpayers when applying for a partial deduction. This includes a 25% reduction for interior lighting systems, 15% for HVAC systems including hot water, and 10% for the building envelope.

These new standards for application apply only to buildings placed in service after December 31, 2013 and only for partially qualifying properties. Buildings put into service prior to this date but within the scope of the IRS Section 179D Deduction in 2012 or from 2005 onward have the option of using the original energy percentages or the alternate or substitute energy savings previously incorporated into the IRS section 179D.

The building owner or taxpayer making the claim for the IRS Section 179D Deduction 2012 cannot apply twice or use a partial deduction for the same building using different energy savings percentages on each application.

As this can be confusing, working with a company that can explain the IRS Section 179D Deduction 2012 and the benefits that it has for you as a building owner is very important. These professionals have experience and expertise and can assess your building to get you started. For more information visit –

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