Tax Benefits for Architects, Engineers and Contractors Under Section 179D
Architects, engineers and contractors may be eligible for a significant tax benefit as a result of a provision in the Bipartisan Budget Act of 2018 which became law earlier this year. The budget act extended the provisions of Section 179D through the end of 2017. This article will provide an overview of the provisions of Section 179D and its implications for architects, engineers and contractors.
Section 179D (the Commercial Buildings Energy Efficiency Tax Deduction) provides tax deductions for architects, engineers and certain contractors involved in the design of energy efficient government buildings or modifications that improve the energy efficiency of already existing buildings. Key provisions are as follows:
- Provides for a tax deduction of up to $1.80 per square foot for the design of energy efficient government buildings.
- Modifications that increase the energy efficiency of existing buildings also qualify for a reduced deduction.
- Deductions are available to building designers (architects, engineers, general contractors).
- Qualifying federal, state and local buildings and modifications to existing buildings must have been placed in service no later than December 31, 201, to be eligible for the tax deduction.
- Eligible buildings include airports, state colleges and universities, courthouses, jails, etc.
- New buildings placed in-service in 2017 must exceed minimum 2007 ASHRAE standards by 50% in order to qualify for the deduction.
- Modifications to systems in existing buildings must exceed 2007 ASHRAE standards by lesser amounts.
- Qualifying systems include:
HVAC/hot water systems,
- Energy savings must be independently certified.
- Tax benefits have been available since 2006.
- Prior to the 2018 extension, Section 179D had been extended through the end of 2016 as part of the Path Act of 2013.
- The Section 179D tax deduction is claimed in the tax year in which related expenditures were made.
The extension of Section 179D tax benefits rewards architects, engineers and contractors who design qualifying energy efficient government buildings. The extension also rewards taxpayers, who will benefit from lower operating costs of federal, state and local buildings designed to higher energy-efficiency standards. Architects, engineers and contractors should review their government building projects that were placed in-service in 2017 and earlier years to ensure that they receive all tax deductions to which they were entitled.
If you need more information or assessment on how to get this tax benefit or any other suitable for you. Contact us, we will help you throughout the whole process to reduce your bill amount and be benefited from this deductions.