Tax Credits & Deductions for Builders, Developers, and Property Owners

The best real estate developers seek out tax credits and opportunities to cut their costs and improve their bottom line.

Below we will highlight a tax credit and a tax deduction that could benefit your business or the business of someone you work with. These specific tax breaks give favor to energy efficiency in the building and development of real property.  

Section 45L Tax Credit

• Tax credit for energy efficient homes, condominiums, and apartments that are three stories or less. The structure must meet national standards for energy consumption to be eligible for the credit.
• With recent improvements and innovation in construction and development, many recently-built dwellings will easily meet the efficiency level necessary to be eligible for the credit, regardless of whether the developer knowingly made energy-efficient choices.
• Experts recommend that dwellings built within the last 4-6 years are analyzed to determine if they may be eligible for the credit.
• The 45L credit provides developers with a $2,000 credit per dwelling.
• The credit has been extended through the year 2020.
• The credit can also be claimed retroactively.

Section 179D Tax Deduction

• Tax deduction for commercial property owners that meet reduction standards on their energy and power costs when compared to a baseline commercial property.
• Private commercial buildings of all types apply, as well as most government buildings.
• The 179D allows a tax deduction of $1.80 per square foot.
• Partial deductions are available if only certain energy and power systems in the property meet the criteria, as opposed to the whole building.
• Commercial tenants may also be eligible for the deduction if the space they lease meets the reduction standards.

These two methods of tax savings illustrate a trend: the IRS wants to reward individuals and businesses that are taking energy-conscious steps in their building and development endeavors. While this has created an incentive for many to implement environmentally-friendly aspects into their construction, it has also rewarded those who have done so without knowledge of the incentive.

To learn more about how your business can benefit from these and other tax breaks, or to be connected to tax specialists that we work with who provide these services in your area, contact our law offices in Sioux City, Sioux Falls, and Omaha.