Last Chance to Get Your Unclaimed Tax Deductions

By Kendal Noller, Moss Adams LLP


ave you seen

the internet ad about the $58 billion in unclaimed state and federal money that might belong in your bank account? It’s true . . . but what are the odds you qualify for any of it? While the odds of being on

the receiving end of any unclaimed money are undoubtedly low, there are some unclaimed federal tax deduc- tions you may qualify for right now, like the 179D Commercial Buildings Energy Efficiency Deduction. For certain building owners and designers, this deduction can provide some tax savings. But it may not be around for the 2017 tax year, so your 2016 tax return could be the last opportunity to take advantage of it.

Building owners may have unclaimed tax deductions

Te 179D deduction encourages

construction of energy efficient commercial structures and allows building owners to take a federal tax deduction of up to $1.80 per square foot when a building meets certain energy efficiency criteria. Te depreciable basis of the building is reduced by the deduction, resulting in an accelerated tax deduction for the building owner. If you constructed a commercial or multi- family building four or more stories high in 2016, don’t let these deductions slip into the “unclaimed” file.

A/E/C Firms Could Still claim deductions

Even if you’re not a building owner, 20 March/April 2017

you may still be eligible to claim these tax deductions. If a building is constructed for a

non-tax paying, governmental entity, the building owner doesn’t pay taxes and may instead allocate the tax deduction to the building’s primary designer(s). No reduction of basis or depreciation recapture is required for the designer at a later date. A designer may be an architect, engineer, contractor, environmental consultant, or energy-services provider who creates the technical specifications for energy efficient components in the government building. A person who installs, repairs, or

maintains the property isn’t considered a designer for the purposes of this deduction.

How can I stake my claim? To claim the deduction, a

contractor or professional engineer licensed in the state where the building is located must use government- approved energy modeling software to compare the building’s performance with a reference building that meets the minimum energy requirements under standards set by the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE). Buildings constructed in 2016 must be at least 50 percent more efficient than the 90.1-2007 ASHRAE standard (90.1-2001 for buildings constructed prior to 1/1/16) in order to qualify for the full $1.80 per square foot deduction. If a building does not meet the

50 percent standard, it may still qualify for a partial deduction. Tree systems – lighting, HVAC/hot water, and building envelope – are tested under the standard and can qualify whether they are installed in a newly constructed building or as part of a remodel or retrofit. A provision called the interim

lighting rule provides an alternate method of calculating a partial deduction that does not require energy modeling. Lighting that is 40 percent more efficient than the ASHRAE standard is eligible for a $.60 per square foot deduction, and lighting that is 25 percent more efficient is eligible for a $.30 per square foot deduction. Bi-level switching is required

with this rule, except in the case of warehouse facilities where the lighting needs to be 50 percent more efficient with no bi-level switching requirement. With recent advances in LED

lighting, high performance glazings, and variable speed drives, coupled with increasingly stringent energy code requirements, there is a good chance that a newly constructed or remodeled building will qualify for the 179D deduction. If the building in question has qualified for some level of LEED status, it is even more likely.

Some Lost Deductions Can Still Be Claimed In Future

If you are a building owner or

designer, the 2016 tax return filed in 2017 may be your last opportunity to cash in on these deductions. Te 179D provision expired at the end of 2016 and must be used in the tax year when the building was placed in service or by amending a tax return in an open year. However, for building owners, IRS provisions make it possible to claim deductions for eligible improve- ments made between January 1, 2006 and December 31, 2016 on future tax returns. If you missed out on deduc- tions that could have been taken in the past, you can still claim them on your current year tax return. Like the internet ads say, don’t

delay. Speak with a qualified 179D professional to determine if you qualify for any of these tax deductions. 

Kendal Noller, PE, Manager at Moss

Adams LLP, San Francisco, specializes in helping a broad range of companies identify tax deduction opportunities. Call (415) 956-1500 or visit them online at

California Constructor

Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24