We’ve reached the middle of the year. That means, among other things, it’s a good time to look back at the American Taxpayer Relief Act of 2012 (ATRA) passed in January and see whether there are any provisions you may be overlooking. For contractors, there are a number of energy-related incentives still available that may save you money and perhaps generate some business.
ATRA brought a variety of incentives for contractors to acquire and maintain alternative and fuel-efficient vehicles and equipment. Qualified taxpayers may claim a 30% credit — an amount that could total as much as $30,000 — for refueling equipment installed by Dec. 31 that will be used to replenish alternative-fuel vehicles.
This incentive can benefit construction companies in two ways. First, if you already have alternative-fuel vehicles in your fleet, the price for adding a refueling station is that much lower. Second, if you want to expand your fleet with alternative-fuel vehicles, this subsidy likely will boost the practicality of doing so, as refueling stations proliferate across the country — particularly in densely populated urban areas.
Contractors can continue to claim a tax credit for using biodiesel as well as for buying two- and three-wheeled alternative-fueled utility vehicles through the end of this year.
Also extended under ATRA were incentives for businesses to generate energy from renewable resources such as wind power. In addition to those that use wind power, facilities that produce energy from scrap wood and other biomass, hydropower, geothermal, garbage and other renewables are eligible for significant tax savings. Lawmakers extended a 30% production tax credit for bringing these facilities online, too.
Many builders may avail themselves of tax “sweeteners” promoting fuel-efficient vehicles and energy production. But you may also want to get involved in designing and erecting structures for other businesses that take advantage of these attractive incentives.
For example, installations of wind, solar and other alternative energy sources are massive design and construction projects that can take up to a year or more to complete. They typically include complicated structural, electrical and plumbing elements.
In addition, if you’ve taken on public jobs in the past or are considering doing so, keep an eye out for energy-related infrastructure upgrades in your area.
For homebuilders and remodelers, among the more important ATRA-related provisions is a two-year, retroactive extension for homeowners to make energy-efficient upgrades such as thermal replacement windows and skylights.
Under the act, a homeowner may claim a 10% credit on energy-efficient improvements to the home, up to $200 for all eligible thermal replacement windows and skylights installed. The total credit allowed in 2013 for qualifying purchases and installation costs is $500 (reduced by any credits claimed in previous years).
Your construction company itself also may qualify for a tax credit of between $1,000 and $2,000 for building an energy-efficient home.
ATRA’s energy-related provisions represent a dual opportunity for contractors. First, you might be able to use certain incentives to save tax dollars for yourself. Second, you could talk them up to customers and prospects to perhaps inspire some construction projects. Ask your tax advisor for help targeting the provisions for which you’re mostly likely to qualify.
For more information please contact Dustin Deck at [email protected] or at 513.241.3111.