Tax Credit Consultation

KJ Reynolds & Associates and their strategic partner, Engineered Tax Services, work together to provide architects, engineers, and contracts with the tools to bid more competitively, claim 179D and 45L energy efficient deductions, and offset costs associated with improving their processes with the R&D Credit.

Designers of public buildings may qualify for up to $1.80 per square foot for the design of energy-efficient public buildings. Public properties must be placed in service within the 3 years look-back window and prior to Jan. 1, 2017 to qualify.  Additionally, designers whose commercial property clients may qualify are able to use the deduction as a strategy to win more bids.

179D Energy Policy Act

Each newly contractor built, energy efficient residential dwelling, purchased from the contractor and used as a residence over the last few years is eligible for the 45L Tax Credit of $2,000.  For Commercial Property Owners & Designers of Public Buildings; The 179D energy certification calculates the tax deduction achieved from the installation of energy-efficient assets, including HVAC, building envelope, and lighting. The building may qualify for up to $1.80 per square foot ($0.60 per square foot for each system); however, partial deductions are allowed for lighting. The deduction is available for newly constructed or energy renovated commercial buildings as well as apartment buildings 4 stories or more. Commercial property owners who pay taxes can claim the benefit with the exception of government-owned buildings where the tax deduction may be allocated to the designer. Qualifying activities include:

  1. Private or Public
  2. Commercial Buildings
  3. Upgrades, Renovations, and Retrofits
  4. Architects, engineers, contractors, and commercial property owners.
  5. Commercial Residential (4+ stories)
  6. New Construction
  7. Tenants who have made construction expenditures

 

45L Residential Energy Efficient Tax Credit

For Developers of Residential Properties, each newly contractor built, energy efficient residential dwelling, purchased from the contractor and used as a residence over the last few years is eligible for the 45L Tax Credit of $2,000.

Residential dwellings that have a 50% reduction in annual heating and cooling energy usage than that of a property manufactured from the 2004 International Energy Conservation Code (IECC) can qualify for the 45L Tax Credit. In addition to this 50% reduction in energy, at least 1/5th must be a result of building envelope improvements such as insulation, energy efficient windows and so on.

Eligible Contractors

Eligible contractors are those who constructed the energy efficient residential dwelling, and must both own and have a basis on the property during its construction. Additionally eligible contractors could have hired a third party contractor to complete the work. Also, an eligible contractor may also be in the form of an individual, a trust, an estate, a partnership, an association, a company or corporation.

45L Tax Credit Criteria

  1. 15 units or more
  2. Reduction of energy consumption for heating, cooling systems, and building envelope.
  3. Apartments, condos, single family residence, and even mobile homes and house boats may qualify.
  4. Available to the developers of residential properties

 

R&D Tax Credit

The R&D tax credit is the largest government sponsored incentive meant to stimulate technical design, innovation and job creation in the United States. A temporary federal incentive since 1981, it was finally made a permanent federal tax credit as part of the PATH Act of 2015. Most states also have an R&D tax credit, providing an even greater benefit.

A lot of small to mid-sized companies are not aware that many of their day-to-day activities qualify for the credit. Activities such as attempting to develop new or improved products, designs, processes, techniques, software, formulas or inventions can qualify for the credit. Industries including manufacturing, microbrews, distilleries, tool and die/job shops, mold injection, software, pharmaceutical, food processors, apparel/textile, fabricators, agribusiness, and oil and gas can qualify for the credit. The construction industry, including architectural and engineering firms, and general, mechanical and electrical contractors can also qualify.

The R&D credit can provide an immediate source of cash for companies in these industries from prior years, plus a significant reduction in current and future years’ federal and state tax liabilities. Qualifying Activities:

  1. R&D Tax Credit
  2. Developing or formulating new or improved products
  3. Functionally enhancing existing products or formulas
  4. Developing new or improved production processes
  5. Assisting customers with technical problem-solving
  6. Developing new or improved software for use or sale
  7. Applying for patents and prototyping