Detail

Real Estate, Environmental Groups Recommend Accelerated Depreciation for Energy Efficient Building Equipment

  • May 10, 2019

A broad coalition of real estate and environmental organizations urged congressional tax writers this week to establish an accelerated depreciation schedule for a new category of Energy Efficient Qualified Improvement Property installed in buildings – or "E-QUIP."  (Coalition E-QUIP Letter, May 8)

  

A broad coalition of real estate and environmental organizations urged congressional tax writers this week to establish an accelerated depreciation schedule for a new category of Energy Efficient Qualified Improvement Property installed in buildings – or "E-QUIP."  (Coalition E-QUIP Letter, May 8)

  • The coalition, led by The Real Estate Roundtable, recommends "a uniform E-QUIP 10-year recovery period [to] promote productive business investment by spurring high performance upgrades in commercial and multifamily buildings. In turn, optimizing energy efficient building performance will help create well-paying jobs in the construction, design, and energy sectors; boost equipment manufacturing; enhance our country's energy independence; and reduce the built environment's carbon footprint."    
  • Legislation supported by The Roundtable is currently pending to fix a technical error from the Tax Cut and Jobs Act regarding depreciation of interior building improvements, known as Qualified Improvement Property ("QIP").  (Roundtable WeeklyMarch 15 and QIP Policy Comment LetterApril 26)  However, even if Congress fixes the QIP mistake, it would not meaningfully encourage commercial and multifamily owners to invest in expensive high-performance building equipment.    
  • The new E-QUIP coalition thus proposes a beneficial 10-year cost recovery period for efficient HVAC, lights, roofs and other components that will save energy and reduce carbon emissions attributable to buildings, their tenants, and other occupants.  
  • Roundtable President and CEO Jeffrey DeBoer said, "The purpose of establishing a new E-QUIP category in the tax code is to stimulate productive, capital investment on a national level that modernizes our nation's building infrastructure while helping to lower greenhouse gas emissions.  As Congress considers potential tax, infrastructure, and climate legislation, the E-QUIP proposal should have bipartisan appeal on a range of important policies prioritized by Republicans and Democrats."
  • An elective 10-year, straight-line cost recovery period for E-QUIP expenditures for taxable income, as well as for earnings and profits purposes, is the core of the proposal.  Other elements recommended to Congressional tax writers for consideration in E-QUIP legislation are set forth in the real estate and environmental groups' coalition letter.   

E-QUIP will be one of many policies affecting commercial real estate discussed during the June 11-12 Annual Roundtable Meeting in Washington DC.