Financial Incentives for Building Eco-Friendly Properties

[Julio Gonzalez]

Thanks to the huge tax perks available to those who build more green properties, it’s a win-win scenario of being able to help the environment while also being rewarded financially. If you’re a builder, homeowner or investor, this article is for you and how going green may help your bottom line.

Financial Incentives for a Building a Sustainable Property

• Tax Incentives: Project costs may be offset by 30% or more due to improvements qualifying for federal tax deductions and credits.
• Long-term savings: Environmentally friendly upgrades such as low-flow plumbing, ENERGY STAR appliances and solar panels can help cut energy bills significantly.
• Increased property values: Energy efficient properties typically have higher rental incomes and property values.

Tax Credits Available

• 45L Tax Credit: You can receive as much as $5,000 dollar-for-dollar tax credits for residential dwelling units that are considered energy-efficient. For more details, see the article linked. Energy Savings Credit for Your Property! (biggerpockets.com)
• Section 179D Deduction: If you install qualifying energy-efficient systems in existing or new commercial buildings or residential buildings over 3-stories, you can deduct up to $5.00 per square foot. For more details, see the article linked. New IRS Guidelines for 179D Deductions! (biggerpockets.com)

If you are wanting to take advantage of the financial incentives and tax credits, be sure to work with architects, contractors and designers that specialize in building energy efficient properties. This will help ensure that your property meets the efficiency standards and technical requirements in order to qualify for the tax breaks.

Additionally, be sure to have conversations with your CPA before starting these projects as they can help ensure you are getting every deduction and credit that you qualify for and teach you what proper documentation will be required to support the credits and deductions.

Are you building green? If not, what questions do you have for me?