President Donald Trump signed the COVID relief bill and fiscal year 2021 omnibus spending package on December 27th, 2020 which contained two tax incentives that benefit architects, engineering firms, commercial building owners, and construction firms.
The Section 179D commercial property energy efficiency deduction, set to expire at then end of 2020, was made permanent and is eligible for improvements meeting above-industry energy-efficiency standards in the year in which the homes are placed in service. This deduction is used for multifamily housing energy efficiency upgrades and will lead to millions of dollars in savings and help to limit carbon emissions. In addition, the energy-efficiency standards have been updated and the deduction rate is now indexed for inflation leading to more potential savings.
45L also received attention in this bill, with an extension put in place through the end of year 2021. The energy-efficient home tax credit provides property owners up to $2,000 per unit, which, for multi-family dwellings can lead to big savings. An Affordable Housing Credit Improvement Act provision would allow the use of the 45L credit, and 179D deduction without reducing the low-income housing tax credit basis.
We are very pleased to have these incentives extended into the new year and to provide the savings to businesses who need it most. If you have any questions on this or any of the other commercial tax services we provide, please reach out to our tax professionals at (561) 257-3436.