Retail Owners: Last Chance for Huge Tax Savings Before 179D Ends in 2026!

Marc Perlof • September 22, 2025

Hey, Retail Real Estate Rockstars!


Property owners could lose tens of thousands in federal tax savings on building upgrades starting July 2026. The Big Beautiful Law (H.R. 1) ends the Energy Tax Deduction for Commercial Buildings (§ 179D). If you’ve been counting on tax savings for energy upgrades like HVAC, lighting, or windows, here’s what you need to know to plan smart.


What § 179D Gave You vs. What’s Changing

Before, § 179D let building owners (including retail landlords) take tax deductions for energy-saving improvements, things like LED lighting, efficient HVAC systems, and better insulation or windows. These deductions often meant real money saved when making upgrades.
Now, under H.R. 1:

  • Starting July 1, 2026, new construction or upgrade projects will no longer qualify for § 179D deductions¹.
  • That means no tax savings for HVAC, lighting, or other energy upgrades if work begins after June 30, 2026.
  • Projects already started before that date may still qualify.


Key Points

  • The energy tax deduction (§ 179D) ends for projects that begin after June 30, 2026¹.
  • Retail owners planning upgrades should move quickly to use the benefit before it disappears.
  • Budgets, return on investment (ROI), and financial models need to be updated for this change.


Data You Should Know

  • § 179D savings were often measured in dollars per square foot of upgrades across lighting, HVAC, and building envelope systems².
  • The repeal impacts all commercial building owners starting new projects after mid-2026¹.
  • For example, a $250,000 HVAC upgrade that qualified under § 179D could deliver $25,000–$50,000 in tax deductions, savings that disappear once the repeal takes effect.
  • Without § 179D, payback periods could stretch longer with ROI dropping by 10–20% on similar projects².


What This Means for Your Property

If you’ve been planning energy-efficient upgrades and counting on § 179D:

  • Your ROI will be lower — you’ll need to depend on state programs, utility rebates, or direct energy savings.
  • Any deals assuming § 179D must be re-checked and adjusted.
  • Getting upgrades done before June 30, 2026 can help maintain property value since future buyers won’t have this tax break.


If you’re a retail property owner looking at upgrades, whether for lighting, HVAC, windows, or insulation, this repeal changes the game. Let’s review your projects, see if they can begin in time to qualify, and adjust your cash flow plan. Call or DM me to map out your best move.


With § 179D ending on June 30, 2026, what upgrades will you push forward now and will they still hold value once the tax break is gone?


#179DRepeal #EnergyEfficientTaxDeduction #CommercialBuildingUpgrades
#TaxSavingsForHVACLighting #HR1EnergyTax

Footnotes & Sources

  1. H.R. 1, Sec. 70507: Termination of Energy Efficient Commercial Buildings Deduction — “This section shall not apply with respect to property the construction of which begins after June 30, 2026.”
  2. Historical § 179D allowed deductions in the range of dollars per square foot for energy-efficient commercial upgrades across lighting, HVAC, and building envelope systems.

Disclaimer

This post is for information only. It is not legal, tax, or financial advice. Always check with a licensed professional before making decisions.




© 2025 Marc Perlof Group. All rights reserved.

Weekly Perl: A Commercial Real Estate News Recap

By Marc Perlof • May 22, 2026
Retail Real Estate Leaders Brace for Inflation Risks Retail real estate professionals arrived at ICSC Las Vegas this week with leasing momentum still intact, but economic anxiety creeping into conversations across the industry’s biggest annual gathering. Executives interviewed by CoStar News said resilient consumer spending and active retailer demand continue to support the sector, even as inflation, fuel prices, and global instability cloud the outlook for the second half of 2026...

When to Sell a Retail Property Without an Asking Price

By Marc Perlof • May 18, 2026
By Marc Perlof | MarcRetailGuy CA #01489206 May 18, 2026 If you own retail real estate, here’s what just changed for you. In some situations, removing the price can lead to stronger offers. This approach allows the market to determine value instead of limiting it upfront. When used correctly, it can create competition and improve your outcome. More retail properties are being marketed without a price. Brokers are using offer-driven strategies to let buyers compete based on their own assumptions. What is causing it? Differences in buyer expectations and uncertainty in valuation are driving this shift. In many cases, investors and developers value the same property differently, especially when there is upside or redevelopment potential. How does removing the price affect your value? Removing the price can eliminate the ceiling. Buyers are not anchored to a specific number, which can lead to stronger offers when demand is present. When multiple buyers are involved, this approach can create competition and push pricing higher. What is the risk? If demand is limited, offers may come in below expectations. This often happens when the buyer pool is thin or when the property has uncertainty, such as a short lease term, tenant risk, or redevelopment challenges. When should you use Request for Offers? Use it when there is strong demand and the property is expected to attract multiple buyers. Even in these situations, active buyers and brokers will often ask for pricing guidance or a whisper price to understand where the seller expects the deal to trade. When should you use a more flexible approach? Use submit offers when you want flexibility and are testing the market. This approach allows you to respond to buyer feedback while still maintaining control of the process. Some properties are marketed without a price because the broker does not have a clear view of value. That is not the same as a strategy. When used correctly, removing the price is intentional and supported by buyer demand, positioning, and a defined process. Without that structure, it can create confusion and weaker results. We are seeing strong assets generate multiple offers with this approach, while weaker deals struggle to gain traction without pricing guidance. This strategy is not about avoiding a price. It is about allowing the market to define it when the conditions support it. If you need context, review Part 2: “Should You List Your Retail Property With an Asking Price?” In next week’s final article, read “How Strategic Underpricing Can Increase Your Retail Property Sale Price” (Part 4) , including one approach many owners overlook. If you are considering an offer-driven strategy, reach out before going to market. I will help you determine if your property can support it and how to structure it properly. Call or DM me for more information. Would removing your price increase your value or create uncertainty? Based in Los Angeles. Serving Southern California. Active across California. Advising clients nationwide. #RetailRealEstate #CRE #InvestmentProperty #CommercialBroker #LosAngelesRealEstate #NNN #RetailInvesting #PropertySales

Weekly Perl: A Commercial Real Estate News Recap

By Marc Perlof • May 15, 2026
CPI surged in April as inflation soars to highest level in almost 3 years Inflation accelerated in April to an annual rate of 3.8%, the highest since May 2023, as the Iran war pushed up energy costs and raised prices across the economy. By the numbers Economists predicted inflation would jump to 3.7% on an annual basis, up from the 3.3% reading in March, according to a FactSet poll.
More Posts