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Instructions for Form 7205

Department of the Treasury
Internal Revenue Service

(December 2022)

Energy Efficient Commercial Buildings Deduction

Definitions

Section references are to the Internal Revenue Code
unless otherwise noted.

DRAFT AS OF
November 22, 2022
Future Developments

For the latest information about developments related to
Form 7205 and its instructions, such as legislation
enacted after this form and instructions were published,
go to IRS.gov/Form7205.

What’s New

Form 7205 is a new form that is used to claim the
deduction for energy efficient commercial building
property placed in service before January 1, 2023.
Taxpayers with a short tax year beginning in 2023 and
ending in 2023 that place qualifying property in service
during this period, see Who Must File below.

General Instructions
Purpose of Form

Use Form 7205 to:
• Calculate and claim the deduction under section 179D
for qualifying energy efficient commercial building
property placed in service during the tax year;
• Identify yourself as a designer or the building owner;
• Provide information on the person performing the
certification; and
• Provide information on the person completing the
allocation.

Who Must File

Individuals and business entities that qualify to claim the
deduction for qualifying energy efficient commercial
building property (EECBP) placed in service during the tax
year must file Form 7205 to claim the deduction.

If filing Form 7205 for a short tax year beginning in
2023 and ending in 2023, and the 2023 form is not
available, use Form 7205 (December 2022), taking into
account any tax law changes for section 179D that are
effective for tax years beginning after December 31, 2022.
Attach Form 7205 and a statement showing the
calculation of the deduction.

Additional Information

For more information, see section 179D. Also see the
following.
• Notice 2006-52, 2006-26 I.R.B. 1175, available at
IRS.gov/irb/2006-26_IRB#NOT-2006-52.
• Notice 2008-40, 2008-14 I.R.B. 725, available at
IRS.gov/irb/2008-14_IRB#NOT-2008-40.
• Notice 2012-26, 2012-17 I.R.B. 847, available at
IRS.gov/irb/2012-17_IRB#NOT-2012-26.

Nov 22, 2022

Energy efficient commercial building property
(EECBP) is property that meets the following criteria:
• Is depreciable property;
• Is installed on or in a building located in the United
States, and within the scope of Reference Standard 90.1
(defined below);
• Is installed as part of the interior lighting systems,
heating, cooling, ventilation, and hot water systems, or the
building envelope; and
• Is certified as being installed as part of a plan designed
to reduce the total annual energy and power costs with
respect to the interior lighting systems, heating, cooling,
ventilation, and hot water systems of the building by 50%
or more in comparison to a reference building which
meets the minimum requirements of Reference Standard
90.1.

Reference Standard 90.1 is the most recent Standard
90.1 published by the American Society of Heating,
Refrigerating, and Air Conditioning Engineers and the
Illuminating Engineering Society of North America which
has been affirmed by the Secretary, after consultation with
the Secretary of Energy, no later than the date that is 2
years before the date that construction of such property
begins.
Building square footage is the sum of the floor areas of
the conditioned spaces within the building, including
basements, mezzanine, and intermediate-floored tiers,
and penthouses with headroom height of 7.5 feet or
greater. Building square footage is measured from the
exterior faces of exterior walls or from the centerline of
walls separating buildings, but excludes covered
walkways, open roofed-over areas, porches and similar
spaces, pipe trenches, exterior terraces or steps,
chimneys, roof overhangs, and similar features.

Special Rules

A certification completed by a qualified individual is
required for both building owners and designers to claim
the deduction under section 179D for EECBP. The
certification must meet the requirements specified in
Notice 2006-52, Section 4.

A qualified individual is an individual that:
• Is not related to the person or entity claiming the
deduction;
• Is an engineer or contractor that is properly licensed as
a professional engineer or contractor in the jurisdiction in
which the building is located; and
• Has represented in writing that he or she has the
requisite qualifications to provide the certification required
under Notice 2006-52, Section 4, or to perform the
inspection and testing described in Notice 2006-52,
Section 4.05.

Cat. No. 93340H

greater using the regular method, the All systems, or “A”
column may be used. If 50% is not reached, list each
system separately among the “E,” “H,” and/or “L” columns.

An allocation of the EECBP deduction to the designer
of a government-owned building must be in writing and
meet the requirements of Notice 2008-40, Section 3.04, in
order for the designer to claim the deduction.

Interim lighting rule. If using the interim lighting rule,
enter the computed interim lighting applicable percentage
defined in Notice 2006-52, Section 2.03(2)(b)(ii). Do not
enter the reduction in power density in column 1(c).
If only the reduction in power density is known, use the
worksheet below to compute the interim lighting
applicable percentage. Enter the computed amount in
column 1(c) if the interim lighting rule is used.

Specific Instructions

DRAFT AS OF
November 22, 2022
Note. If claiming the EECBP deduction for more than four
properties, complete and attach as many Forms 7205 as
needed to list them. However, complete Part II, line 3 (for
total section 179D deduction) on only one Form 7205. The
line 3 amount on that form should include the combined
total for all properties reported on all Forms 7205. See the
instructions for Part II, line 3.

1.

Who Is Claiming the Deduction

At the top of Form 7205, check the status that applies to
the person claiming the deduction. Check only one
status. Select either building owner or designer of energy
efficient commercial building property (EECBP).

2.

3.
4.

Building Owner. Check the “Building owner” box if you
are the owner of the building and are claiming the
deduction for qualifying property installed on or in your
building.

Enter the lighting power density reduction
percentage . . . . . . . . . . . . . . . . . . . . . . . .
1.
If the amount on line 1 above is 40% or greater,
enter 100% on line 4. If line 1 is less than 25%, enter
0% on line 4. Otherwise, go to line 2
Subtract the amount on line 1 from 40% . . . . . .
2.
Multiply the amount on line 2 by 3 1/3 . . . . . . . .
3.
Subtract the amount on line 3 from 100% and enter
this amount in column (c), column (L) for the
property. Check the box on column 1(d) . . . . . .

4.

Note. An exception applies to warehouses. The reduction
in power density must be 50% or greater. If the property is
a warehouse and the reduction in power density is 50% or
greater, enter 100% in column 1(c), column L for the
property. If less than 50%, enter 0.

Designer of energy efficient commercial building
property (EECBP). In the case of EECBP installed on or
in property owned by a federal, state, or local government
or a political subdivision thereof, the deduction may be
allocated to the person primarily responsible for designing
the property in lieu of the owner of such property. Check
the “Designer” box if all the following are true.
• You are the person primarily responsible for designing
the EECBP (the designer);
• You created the technical specifications for installation
of the EECBP within a government-owned building. A
person that merely installs, repairs, or maintains the
property is not a designer; and
• The government building owner provided you a written
statement allocating the deduction to you.

Line 1, Column (d)

Check the box in column 1(d) only if the interim lighting
rule was used for the interior lighting system. Information
regarding the interim lighting rule can be found in Notice
2006-52, Section 2.03(1)(b).

Line 1, Column (e)

Use the Worksheet for Form 7205, Line 1, Column (e),
later, to compute the total potential amount per square
foot. Each property has a maximum amount per square
footage limit for the life of the property. Once that limit is
reached, no further deductions may be taken for the
property. See the instructions for line 2, column (b), later,
for the maximum amount.

Part I—Building and EECBP
Information
Line 1, Column (a)

Line 1, Column (f)

Enter the name, street address, city or town, state, and
ZIP code of building(s) on or in which the EECBP is
installed. Keep buildings separated on lines A, B, C, and
D.

Enter the building square footage for the property. See the
definition of building square footage, earlier.

Part II—Computation of Energy
Efficient Commercial Buildings
Deduction Amount

Line 1, Column (b)

Enter the date the property was placed in service.

Line 1, Column (c)

Enter the computed energy savings percentage for the
applicable building systems, rounded to two decimal
places. Each column corresponds to a specific system of
EECBP: A = All systems; E = Building envelope; H =
Heating, cooling, ventilation, and hot water; L = Interior
lighting. The energy savings percentage entered is to be
computed using the computation methods specified in
Notice 2006-52. If the total energy savings is 50% or

Line 2, Column (a)

Enter the aggregate per square foot dollar amount that
was claimed for the building in all prior tax years. The
aggregate amount for the building includes the amount
you claimed, and amounts claimed by others, including
previous owners of the building.

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Instructions for Form 7205 (December 2022)

1. Enter the total deduction for the building claimed
in all prior years by you and/or any other
parties . . . . . . . . . . . . . . . . . . . . . . . . .
2. Enter the amount from Form 7205, line 1,
column (f) for building . . . . . . . . . . . . . . . .
3. Divide line 1 by line 2. Enter this amount on Form
7205, line 2, column (a) . . . . . . . . . . . . . . .

Line 2, Column (h)

In column (h), enter the greater of column (d) or column
(f). If you are a building owner with a partial building
ownership, refer to your ownership or lease agreement to
determine how the amount should be allocated among the
owners. Only enter your allocated portion of the computed
amount per square foot in column (h). It will generally be
your allocated percentage, as defined in the ownership
agreement, multiplied by the greater of column (d) or
column (f).

1.
2.
3.

DRAFT AS OF
November 22, 2022
Line 2, Column (b)

Subtract line 2, column (a), from the maximum full amount
allowed (from the chart below) for the tax year.
The maximum amount allowed each year is as follows:
Tax Year

Maximum Full
Amount Allowed

Maximum Partial
Amount Allowed

All years beginning
before January 1,
2021

$1.80

$0.60

For tax years
beginning on or after
January 1, 2021

$1.82

$0.61

For tax years
beginning on or after
January 1, 2022, and
before January 1,
2023

$1.88

$0.63

Line 2, Column (j)

Designers. If you are claiming the deduction as the
designer of EECBP, you may only claim the amount the
government building owner has allocated to you on the
appropriate allocation documents. Enter the dollar amount
allocated to you as designer on line 2, column (j).

Line 3. Total Section 179D Deduction

Add the amounts in line 2, column (k). Enter the total on
line 3. Also include the total on the applicable line of your
tax return. For example, if filing Form 1120, include the
total on “line 26, Other Deductions.” Attach Form 7205.
See the instructions for your tax return.

If you are claiming the deduction for more than 4
properties, complete as many Forms 7205 as needed to
list them. However, complete line 3 on only one form. That
line 3 amount should include the combined total of all
properties reported on all Forms 7205.

Line 2, Column (d)

Part III—Certification Information for
Each Property Listed in Part I

If line 2, column (c), is checked, enter the amount from
line 1, column (g); skip line 2, columns (e) and (f); and go
to column (g). If line 2, column (c), is not checked, enter
zero on line 2, column (d), and go to line 2, column (e).

Enter the information regarding the qualified individual
who completed the certification for each claimed property.
See qualified individual, earlier.

Line 2, Column (g)

Enter the cost of EECBP placed in service during the tax
year. The cost of EECBP does not include the total cost of
the building or general renovation. It is limited to the cost
of the building systems that make up the EECBP. See the
definition of energy efficient commercial building property.
EECBP does not include property such as ovens and
fryers, manufacturing equipment, elevators or escalators,
or exterior lighting, only the specific items that make up
the systems of EECBP.
If you are a building owner with a partial building
ownership, refer to your ownership or lease agreement to
determine how the expense is to be allocated among the
owners. In column 2(g), only enter your allocated portion
of the cost of EECBP placed in service during the year.

Instructions for Form 7205 (December 2022)

Part IV—Designer Allocation
Information for Each Property Listed
in Part I
Complete this section only if you checked the designer
box at the top of the Form 7205.
Enter the information regarding the government
building owner and the individual completing the
allocation form.

-3-

Worksheet for Form 7205, Line 1, Column (e) (Complete for each
building)

Keep for Your Records

1.

Enter the percentage from Part I, line 1(c), column A . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2a.

If the amount entered on line 1 above is 50% or greater, enter $1.88 on line 1, column (e),
and skip the remainder of the worksheet for this building.
Enter the percentage from Part I, line 1(c), column E . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2a.

2b.

Enter the percentage from Part I, line 1(c), column H . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2b.

2c.

If Part I, line 1, column (d), is unchecked, enter the percentage from line 1, column (c),
column L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
If any of the amounts on lines 2a, 2b, or 2c above are 50% or greater, enter $1.88 on line 1,
column (e), and skip the remainder of this worksheet for this building.
Add lines 2a, 2b, and 2c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.

DRAFT AS OF
November 22, 2022
3.

5.

If line 3 is 50% or greater, enter $1.88 on line 1, column (e), and skip the remainder of this
worksheet for this building.
If the amount on line 2a above is 10% or greater, enter $0.63. If less than 10%,
enter 0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
If the amount on line 2b is 15% or greater, enter $0.63. If less than 15%, enter 0 . . . . . . . .

6.

If the amount on line 2c is 25% or greater, enter $0.63. If less than 25%, enter 0

7.

If line 1, column (d) is checked, enter the amount from line 1, column (c), column L . . . . . .

8.

Multiply line 7 by $0.63 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.

2c.

3.

4.

5.

........

6.

7.

8.
9.
Add lines 4, 5, 6, and 8. Enter the total here and on line 1, column (e) . . . . . . . . . . . . . . . .
9.
Note: This worksheet uses the amount per square foot rates applicable for tax years beginning on or after January 1, 2022, and before January
1, 2023. See the table included in the instructions for line 2, column (b), for the amount per square foot rates for other years.

-4-

Instructions for Form 7205 (December 2022)