The property is a luxury, four-story apartment building constructed at a cost of $26,430,000 and placed in service in 2021. Located in southern New Jersey, the 227,000 square foot building includes 144 one- and two-bedroom apartment units in varying sizes, 43 individual garages on the first floor, and high-end amenities and community areas located throughout the property.
After conducting a cost segregation study that saved our client millions in income taxes, CRS engineers were confident that the apartment building would also be a good candidate to qualify for an additional 179D deduction. The incentive enables taxpayers to take either a partial or full deduction for three building components (lighting, HVAC, and building envelope) if they meet the Department of Energy’s energy-efficiency guidelines. In 2021, deductions were calculated at a rate of $.61 per square foot for each component or a maximum of $1.82 per square foot if all three qualified. As an independent third party, CRS conducted a thorough analysis of the materials used throughout the building construction to determine its eligibility for the deduction.
Qualifying Property | Total Energy and Power Cost Savings | Floor Area (Sq. Ft) | Benefit Rate (2021) | 179D Deduction | Tax Savings |
|---|---|---|---|---|---|
Building (envelope, HVAC, lighting) | 50% | 211,000 | $1.82 | $384,000 | $153,600
|
Garage (lighting) | 81% | 16,000 | $0.61 | $9,800 | $3,920
|
Two years after the completion of the 179D energy-efficient certification and cost segregation study, our client was audited by the IRS on their federal taxes. Thanks to the diligent investigations, comprehensive analyses and thorough documentation submitted by the CRS team for both projects, our work was fully validated and there were no IRS changes at all to the tax return.
Take control of your property’s tax burden and discover the hidden potential in your assets.
© 2025 Cost Recovery Solutions LLC
