By: Nancy Chillag
Since 2005, certain companies are allowed to take a deduction equal to 3% to 9% of their net income for building and renovation of residential and commercial properties. I'm talking about construction, engineering and architectural companies that were hired by a homeowner or business owner to construct or renovate a home or building. If you fall within this category, you want to make sure your accountant took this incredibly valuable deduction.
This is called the Domestic Production Activities Deduction. A business engaged in a qualifying production activity is eligible to take a tax deduction of 3% in tax years 2005 and 2006. The deduction increases to 6% in year 2007, and goes up to 9% in year 2010.
Here are the "qualified production activities" eligible for claiming the deduction under Internal Revenue Code Section 199:
- Manufacturing based in the United States,
- Selling, leasing, or licensing items that have been manufactured in the United States,
- Selling, leasing, or licensing motion pictures that have been produced in the United States,
- Construction services in the United States, including building and renovation of residential and commercial properties,
- Engineering and architectural services relating to a US-based construction project,
- Software development in the United States, including the development of video games.
CHECK YOUR TAX RETURNS NOW! If your accountant has not provided this deduction to you, ask him/her to amend your returns. This could be huge dollars in your pocket!
Nancy Chillag is the founder of Chillag & Associates and has been practicing law for over 25 years. She is passionate about helping her clients manage their business, real estate and general wealth efficiently and for the benefit of their family for the long term. Nancy is not only an attorney; she is also a Certified Public Accountant and a licensed Real Estate Broker. She is able to communicate with all your trusted advisors to ensure that you obtain the best solutions to your legal issues. She is passionate about helping you and your family to be as protected as possible and prepared for the future. You may contact her at www.chillag.com
Reprinted with permission.