Contractor / Builder / Developer Tax Plan


Let our team assist you with your Contractor / Builder / Developer Tax Plan. When tax time rolls around, it is not uncommon for contractors to feel like the deck is automatically stacked against them. But the right tax planning strategy gives you a few “aces up your sleeve” to ensure the House, in this case – the IRS, doesn’t catch you off guard.

When you add in the challenges and uncertainties of late, understanding the tax benefits available to you is more important now than ever. These tax benefits could help you improve your hand and save a substantial amount of money. As you build your 2023 tax planning strategy, there are several tax credits and deductions contractors should consider.



179D Commercial Buildings Energy-Efficiency Tax Deduction

The 179D tax deduction allows eligible builders to claim a tax deduction for installing certified energy-efficient systems and buildings. The CAA made the deduction for energy-efficient commercial buildings permanent. Generally, a tax deduction of $1.80 per square foot is available to owners of new or existing buildings who install interior lighting, a building envelope, or HVAC or hot water systems that reduce the related energy and power cost by 50% or more in comparison to the minimum requirements in place.

Under the latest version of the BBBA, for taxable years beginning after December 31, 2021, and before January 1, 2032, the base credit amount for certain property would be equal to $0.50 increased (but not above $1) by $0.02 for each percentage point by which the total energy and power costs for the building for the year are certified to be reduced by 25%. The bonus credit amount would be equal to $2.50 increased (but not above $5.00) by $0.10 for each percentage point greater than 25%. Credit amounts would be adjusted for inflation in years following 2022.

The BBBA would also change the lifetime cap to a 3-year cap on the maximum amount of deduction for a building. Qualifying taxpayers would also be able to elect to take an alternative, parallel deduction for energy-efficient lighting, HVAC, and building envelope costs placed into service in connection with a qualified retrofit plan. In addition, the BBBA would provide a bonus credit amount for certain property that satisfies wage and apprenticeship requirements during the “construction, alteration, or repair” of any property or building modifications.