Hi Shaun, if you are referring to the Section 179d "green building" tax deduction of $1.80 per square foot, then yes it's possible for tenants to take the deduction if the circumstances are right.

According to the DSIREUSA.org incentives database, "the commercial building tax deduction is available to owners of new or existing buildings who install (1) interior lighting; (2) building envelope, or (3) heating, cooling, ventilation, or hot water systems that reduce the building’s total energy and power cost by 50% or more in comparison to a building meeting minimum requirements set by ASHRAE Standard 90.1-2001."

This rule was created as part of the "The federal Energy Policy Act of 2005 which established a tax deduction for energy-efficient commercial buildings that is applicable to qualifying systems and buildings placed in service from January 1, 2006, through December 31, 2007." However, this deduction has (thankfully) been extended several times, most recently through 2013 by Section 303 of the federal Energy Improvement and Extension Act of 2008 (H.R. 1424, Division B), enacted in October 2008.

To answer your question, deductions for applicable work are available primarily to building owners, although tenants may be eligible if they absorb the construction expenditures. Probably makes sense to speak with a CPA.

The more appealing part of Section 179d is that deductions of $0.60 per square foot are available to owners of buildings where smaller discrete improvements are made, such as making improvements to inefficient lighting. These specific discrete changes apply to individual lighting, building envelope, or heating and cooling systems that would reasonably contribute to an overall building savings of 50% if additional systems were installed.

See DSIREUSA.org for more details.

Related Advice:

• Energy Efficient Buildings: Lower Property Tax Assessments?



• Section 179D: The Green Building Tax Deduction