A major federal tax incentive for energy-efficient commercial buildings has changed — but some HVAC contractors may still have money on the table.
The deduction rewards energy-efficient commercial-building improvements involving systems such as:
HVAC,
building envelope,
and lighting.
Contractors Can Sometimes Claim It
The incentive is particularly interesting for mechanical contractors working on public buildings.
Government entities generally do not pay federal income tax.
In qualifying circumstances, the deduction can instead be allocated to the designer responsible for the energy-efficient system.
That may include the mechanical contractor.
Projects Already Started Matter
The key issue is timing.
Projects that began before the cutoff may qualify under transition provisions even if construction continues afterward.
That means contractors should not assume the incentive disappeared simply because the calendar passed June 30.
Why Contractors Miss It
Many HVAC companies focus heavily on operating margin and project execution.
Tax incentives can fall between the contractor, building owner, CPA and engineering team.
That creates a situation where a legitimate deduction may never be claimed.
The Takeaway
This is not a new rebate for every HVAC project.
Eligibility depends on the project and tax rules.
But contractors working on qualifying commercial or public buildings may want their tax advisers to review older and ongoing work.
The most expensive tax incentive may be the one a contractor qualified for but never claimed.
