Section 179D After June 2026: Project Review Checklist
Review construction timing and eligibility for section 179D separately from cost segregation and bonus depreciation.
The termination rule depends on construction timing
The IRS states that the section 179D deduction is not allowed for property whose construction begins after June 30, 2026. That does not mean every earlier-started project qualifies automatically or that every deduction disappeared on that date. Eligibility, substantiation, and the applicable beginning-of-construction rules still require review.
Do not infer eligibility from a headline
Give the adviser the building type, project scope, construction timeline, and ownership or designer arrangement. Ask what current guidance governs the construction-start determination. Do not assume a signed contract, permit date, deposit, or a stated percentage of spending is sufficient without that review.
Keep the energy analysis and component study distinct
A cost segregation study analyzes property components and costs. Section 179D involves separate requirements and documentation. Confirm which professional is responsible for each workstream and how the resulting tax treatment is coordinated. Purchasing one report does not establish that the other deduction is available.
Build a project evidence packet
Collect contracts, amendments, dated site records, contractor invoices, plans, certification materials, and the project’s placed-in-service evidence. Explain interruptions, changes of scope, and unfinished work. The purpose is to let the reviewer reconstruct what happened, not simply find one date that precedes a deadline.
Model the actual alternatives
Ask the preparer for a projection reflecting the project’s confirmed eligibility and any remaining uncertainty. Avoid substituting an assumed bonus-depreciation benefit dollar for dollar for an unavailable energy deduction. Different provisions address different costs and can interact; the investment decision should use a coordinated calculation rather than stacked headline amounts.
Primary references
Educational information. The return preparer should verify current guidance and apply it to the taxpayer’s facts.
Continue your review
- Bonus Depreciation in 2026: Rental Property Checklist
- STR Renovations: Request a Useful Contractor Breakdown
- How to Choose the Best Cost Segregation Company
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