When a government entity owns a building or project that incorporates sustainable design, it may assign the §179D tax deduction to the primary designer of the project. However, sometimes the government entity merely provides a portion of the funding for a project, which is often the case in large joint ventures such as airports, hospitals or athletic venues. However, if tax ownership resides with a private entity, the deduction belongs to the private entity. 

According to Les Schneider, attorney with Ivins, Phillips & Barker, “…it is possible that the party which holds legal title to the building is not considered the owner of the building for tax purposes…ownership of the building must be determined in the taxable year in which the expenditures are incurred that qualify for the §179D deduction.” This rule applies even if ownership shifts in a later year, as with some public/private ventures.

This is an all or nothing proposition. Even though funding sources may be mixed between public and private entities, the deduction cannot be split between those entities. Tax ownership dictates who may receive the benefit.

Founded in 1983, SourceCorp specializes in EPAct §179D tax deductions, cost segregation studies, LIFO accounting solutions and R&D tax credit studies.

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