Construction Contractors Eligible For Tax Incentive
"Any tax cut is always a good thing for any business," said PHCC and Construction Contractors' Alliance member Mark Giebelhaus of Marlin Mechanical, Phoenix. "Considering the thin margins that most contractors work with, a 3 to 6 percent reduction in taxes can be a significant benefit to growing our businesses."
In the construction field, the deduction provides a tax savings on profits from construction or substantial renovation of real property, including residential and commercial building and infrastructure, such as roads, power lines, water systems, and communications facilities.
The IRS guidelines describe that substantial renovation is based on whether such "activities result in permanent improvements or betterments of property, such that the cost of the activities must be capitalized ... and must materially increase the value of the property, substantially prolong the useful life of the property, or adapt the property to a new or different use."
"This means that plumbing and HVACR contractors who are aware of this new tax incentive can look forward to significant tax savings on eligible construction and renovation jobs," said Lake Coulson, PHCC vice president of government relations. "We encourage everyone to consult with their accountants soon to begin considering what projects may qualify in 2005."
Publication date: 02/14/2005