Nixed energy efficiency deduction could stymie office conversions

President Donald Trump’s so-called “Big Beautiful Bill” signed into law July 4 could make owners less likely to renovate troubled properties or convert them to other uses.

The bill eliminated the Section 179D commercial building energy efficiency deduction, a tax provision established 20 years ago. This measure has been an important incentive for owners to invest in obsolete and financially distressed properties, its supporters say.

Many owners have used the deduction to replace the HVAC systems and lights and have also made other upgrades to reposition their building to attract tenants or convert it from commercial to residential or other use. With the deduction no longer available, the costs of these types of upgrades and conversions may be too steep for some to pursue them.

“Firms that had invested in training, compliance infrastructure, or partnerships with energy audit providers may find themselves holding the bag,” according to an industry expert quoted in a Construction Dive report.

The new law eliminates the credit starting June 30, 2026. Industry groups are expected to push Congress to restore the tax break, the report says.