Will the Inflation Reduction Act Accelerate Decarbonization Within the Real Estate Industry?

Published by Propmodo: Buried within the 730-page Inflation Reduction Act that Congress recently passed is a dizzying array of proposals that directly and indirectly impact the commercial real estate sector. It also includes corporate tax reform, a huge expansion of the IRS, efforts to lower cost of prescription drugs, and energy initiatives. For that last piece, the bill authorizes $369 billion in spending on energy and climate policies, making it the most significant piece of federal legislation ever to address climate change.

The IRA also specifies that architects and contractors of tax-exempt buildings owned by entities like private schools, nonprofits, and charitable organizations are now eligible to benefit from the expanded 179D tax rebate. Ralph DiNola, CEO of New Buildings Institute, a Portland, Oregon-based think tank that works to improve building energy performance, told me this ‘direct-pay’ provision could be a game-changer. “It’s hard to grasp the scope and scale of the direct pay provision,” DiNola said, noting that these organizations haven’t been able to take advantage of the tax incentives before.