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Architects & Engineers: Leverage a Valuable Tax Incentive

The Tax Analytics Group (TAG) works closely with architects, contractors, and other building professionals, not only to help their bottom lines, but their clients as well. There are several tax planning ideas, such as the energy efficiency incentives and cost segregation that make sizeable construction costs more palatable.


Since we often rely upon design professionals to provide blue prints, technical specifications, and other assistance necessary to complete our tax projects, we have programs in place to provide financial incentives for their efforts. This creates a true win-win situation, whereby both the building professionals and their clients can share in these valuable financial incentives.


The Energy Efficient Commercial Building Deduction

The savings for energy efficiency extend beyond reduced utility bills. The Tax Analytics Group (TAG) can help you leverage a valuable Federal tax incentive that encourages energy efficiency in buildings. This incentive improves the return on investment for energy efficient design, making your value proposition more attractive to your clients. Even better, a special rule for public buildings allows you to take this valuable incentive for yourself.

How it Works

As part of the Energy Policy Act of 2005 (EPAct) and codified under §179D of the Internal Revenue Code, commercial building owners may be eligible for an additional Federal tax deduction of $1.80 per square foot of floor space for energy efficient interior lighting and HVAC systems as well as the building envelope. To qualify for the tax incentive, energy and power costs must be reduced by set percentages when compared to a reference building and are often met with current design techniques.


The cash benefits for installing energy efficient lights in a 100,000 square foot commercial facility are worth approximately $56,000 if it full meets the requirements of this incentive. Please try our benefits calculator to estimate the tax savings for your project. To learn more about tax incentives for energy efficiency, please click here.


Special Rule for Public Projects...Free Money

A special rule allows a governmental entity to assign the deduction to the person primarily responsible for designing the property, which may include an architect, engineer or contractor. Thus, public education facilities, municipal parking garages, and other government buildings that your firm has designed and constructed may qualify for the deduction. A 100,000 square foot building that fully meets the energy efficiency requirements is typically worth $63,000 in Federal tax incentives, in other words, this is cash straight into your pocket.

How We Can Help

We offer complete solutions, which include:


  Perform free assessments to pre-qualify the project.
  Calculate the value of the tax incentive.
  Prepare marketing materials and the certification packages branded under your firm’s name and logo.
  Coordinate with tax professionals to fully understand and properly record the tax incentive.
  Assist with assigning the tax incentive from the government agency to you for public projects.


Cost Segregation Studies

A cost segregation study is a tax deferral tool allowing property owners to allocate building costs between real and personal property. At the Tax Analytics Group (TAG), our cost segregation studies drastically improve cash flow by accelerating tax depreciation deductions.


How it Works

The premise of a cost segregation is simple...a dollar is worth more today than it is worth tomorrow.


The sizeable capital expenditures for buildings are not immediately deductible against taxable income. They are typically spread over 39 years, as required by IRS tax rules. However, IRS guidance and case law allow components of a building’s cost to be reclassified from 39 years to personal property depreciated over 5, 7, and 15 years. The benefit of a cost segregation is usually between 2.5 to 10 percent of the building's cost. Neglecting a cost segregation for a commercial building is akin to giving the IRS a long-term, interest free loan. To learn more about cost segregation, please click here.


Do you want to know more on how we can help your clients, strengthen your relationships, and improve your financial position? Please contact us for a free consultation.


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