What counts as beginning of construction for the Section 179D sunset?

Pending 179D-specific guidance, practitioners look to the two established IRS tests: the physical work test — significant physical work of a demonstrable nature, on site or off site under a binding contract, excluding preliminary activities like design, permitting, and site clearing — and the 5 percent safe harbor, under which paying or incurring at least 5 percent of total project cost begins construction. Both tests carry a continuity expectation.

Can a home certified under 45L but sold after June 30, 2026 still get the credit?

No. Section 45L's trigger is acquisition — the date the home is sold or leased for use as a residence — not completion or certification. A fully certified home that closes on or after July 1, 2026 generates no credit. There is no transition relief for homes under contract but not closed by the deadline.

Can 179D still be claimed for buildings placed in service in earlier years?

Yes. A building owner who failed to claim 179D on qualifying property it owns generally files Form 3115 for an automatic accounting-method change with a Section 481(a) catch-up deduction — no amended return. Designers receiving allocations on government or tax-exempt buildings must instead amend, which limits them to open years, generally the last three.

After June 30, 2026: what the 179D and 45L terminations actually cut off

The One Big Beautiful Bill Act ended the two building energy incentives on the same calendar date with two different triggers: Section 179D does not apply to property whose construction begins after June 30, 2026, and Section 45L does not apply to homes acquired after June 30, 2026. As of July 2026, both dates have passed. The planning question is no longer how to start in time — it is which projects made it under the wire, how to prove it, and what remains claimable for prior years.

Two triggers, very different consequences

The asymmetry matters. 179D's construction-beginning trigger is generous: a tower that broke ground in June 2026 and reaches placed-in-service in 2028 still qualifies, certification and all. 45L's acquisition trigger is a hard stop: certification, completion, even a signed purchase contract counted for nothing if closing slipped to July 1. Builders who raced certified inventory to closing in the first half of 2026 were behaving rationally; there was no safe harbor to rescue a late closing, and none has been issued.

What "beginning of construction" means

OBBBA did not define beginning of construction for 179D, and as of this writing Treasury has not issued 179D-specific guidance. The reference points are the long-standing frameworks from the Section 45/48 notices (Notice 2013-29 and successors) and bonus depreciation regulations, which the IRS has consistently applied to begun-construction questions:

Physical work test. Construction begins when physical work of a significant nature starts — excavation for foundations, pouring footings, or off-site manufacture of custom components under a binding written contract. Preliminary activities do not count: design, engineering, permitting, financing, test borings, demolition, or clearing the site.
5 percent safe harbor. Construction is treated as begun when the taxpayer pays or incurs (under its method of accounting and the Section 461 economic-performance rules) at least 5 percent of the total cost of the property.
Continuity. Both tests assume continuous work or continuous efforts thereafter. A ceremonial groundbreaking in June 2026 followed by a dormant site invites the argument that construction did not genuinely begin.

Whether the test is measured against the whole building or the energy-efficient property is an open question the eventual guidance will need to answer; conservative practice documents both. Either way, the file should have been built contemporaneously: dated site photographs, foundation inspection reports, executed subcontracts, invoices, and accounting records tying costs to the project as of June 30, 2026. Note that projects beginning construction in 2023 or later also face the tighter ASHRAE 90.1-2019 baseline and full prevailing wage and apprenticeship requirements — a late start preserved eligibility, not ease.

Projects in flight

For qualified in-flight projects nothing else changed: model against the applicable standard, obtain a defensible certification with a post-completion site visit, deduct in the placed-in-service year, reduce basis. The 179D(f) retrofit path deserves a note — its one-year measurement period means final qualifying certifications will keep landing into 2027 and beyond for retrofits that began by the deadline.

Lookback claims

The quieter opportunity is behind, not ahead. Owners who never claimed 179D on qualifying property placed in service in earlier years can generally file Form 3115 (automatic change, with a Section 481(a) catch-up) — no amended return, no closed-year problem, because depreciation is a method of accounting. Designers of government and tax-exempt buildings must amend instead, confining allocation claims to open years. 45L is amended-return territory for eligible contractors, likewise limited to open years. Before commissioning lookback studies, run the sober math: 179D is an acceleration whose value is the rate times the time value (see credits versus deductions), and for property already substantially depreciated through cost segregation or bonus, the marginal benefit may not cover the study.

What this is not

The sunset is provision-specific. Prevailing-wage rules, the DOE certification infrastructure, and other IRA-era credits OBBBA left intact continue on their own terms; and Congress has revived expired energy provisions before, sometimes retroactively. Nothing in current law suggests that here — plan on the text as written.