As an architect or engineer, both you and your clients may be entitled to substantial federal tax incentives. As a result, we are seeing an increasing amount of Architects and Engineers partnering nationally with professionally licensed engineering firms such as Engineered Tax Services to provide independent, third-party certification as required by the IRS to help them take advantage of these significant tax benefits.
179D Energy Certifications
Architects and designers are eligible for a Federal tax benefit of up to $1.80 per square foot for the design of energy-efficient public buildings placed into service after January 1, 2006.
Benefits originally awarded to architects and designers through the Energy Policy Act of 2005 have recently been extended until December 31, 2014 with the efforts and support of the American Institute of Architects (AIA). If you have installed energy-efficient lighting, HVAC systems, or building envelope components (roof, windows, insulation) since 2006, ETS can assess your eligibility for significant savings.
How Energy Benefits Your Clients:
Architects and designers are experiencing positive effects as a result of the Energy Policy Act’s extension.
- Increased satisfaction from commercial-building-owner clients who are eligible for a tax benefit of up to $1.80 per square foot for the installation of energy-saving systems into new or existing construction.
Important: the energy tax certification also helps clients reduce property and casualty insurance premiums.
- Increased cash flow through direct allocation of the federal tax benefit (a partial deduction of $0.60 per square foot) to private property clients for the installation of energy-saving lighting systems in new or existing buildings or to designers for public buildings owned by a federal, state or local government.
Research & Development (R&D) Tax Credit
If your Architectural or Engineering Firm is spending more time focusing on sustainable and green designs to incorporate into building features, then you may be eligible to benefit from the Research and Development Tax Credit. Expenses associated with the development of individually unique functional and energy-efficient designs meet the requirements of the IRS R&D Tax Credit. For Engineering firms, focus is on activities in design and development in structural, mechanical, and electrical systems for unique buildings & structures.
To qualify for the credit, your firm must develop a new or improved business component based on technology grounded in the physical sciences (such as engineering principles, biology, chemistry, and/or computer science). There must also be uncertainty associated with the project, and a process of experimentation and testing to resolve the uncertainty.
What is 199 DPAD?
The Domestic Production Activity Deduction (DPAD) allows businesses such as those in construction, architecture or engineering, with qualified production activities, to take a tax deduction from net income. It is a highly beneficial tax benefit for growing active engineering and architectural firms engaged in production activities. This tax benefit can be implemented on both private and public activities.
Engineering and Architectural services performed regularly on real property in the U.S. for construction projects are considered a suitable activity. Suitable deductions include leases, rentals, licenses, sales, exchanges or other dispositions.
Construction Tax Planning
Construction Tax Planning uses a proactive approach to identifying additional tax benefits related to new and planned construction projects. Accelerated deductions are identified by analyzing costs and documenting their design and construction based on federal guidelines that define tangible property from the stages of a construction project.
Items to be considered for optimal benefits include Interior walls, ceilings, flooring, misc. finishes, warehouse applications, HVAC, plumbing, electrical, building attachments and typical site improvements.
Our ETS Construction Tax Planning engagement team will also analyze I.R.C. Sec. 174 embedded costs, indirect costs, and professional fees (soft costs), during the planning and design phases of a construction project, allowing for an immediate tax deduction in the year the cost is incurred.
Getting ETS involved in the pre-design phase allows our subject matter experts to properly identify the materials and methods, direct and indirect, that maximize personal property and land improvements that qualify for accelerated depreciation deductions. Contact ETS at 800-236-6519 or email here.
179D Architect Case Study: