While people spend 90% of their time inside, indoor air quality has not been a large focus of attention for facilities management and tenants until recently. COVID outbreak has been bringing indoor air quality into the spotlight. The issue of poor indoor air quality is not new. Airtight buildings, minimal airflow and limited ventilation have combined to create the Sick Building Syndrome. That’s why in the 2021 CARES ACT there are tax benefits to allow full deduction of qualifying project costs for nonresidential facility upgrades in a single year, with no limitation on project size.
Qualifying Non-Structural Upgrades include existing building interior equipment upgrades and installation costs for: building management systems, HVAC devices (UVC, sensors, valves & actuators), uninterruptible power supplies, switchgear, and other electrical distribution equipment)
Example Cash Savings Of A QIP Project Cost:
(THERE’S NO LIMIT TO EQUIPMENT COSTS THAT CAN BE EXPENSED + THIS DEDUCTION CAN BE COMBINED WITH OTHER TAX INCENTIVES (renewable energy tax credits & utility rebates.)
A fictional university invests $500,000 in a new classroom and lecture theater ventilation system upgrade, replacing the existing overhead mixing air system with a displacement ventilation system.
The chart shows tax benefits before and after changes the CARES Act made to Section 168 of the tax code
This example is fictional, not a guarantee of actual savings and is not intended to be tax or legal advice. Tax calculations are complex; consult your tax advisor for more specific guidance.
The benefit of the accelerated depreciation results in a cash savings of $102,312 in year one. Combining the savings of the CARES act along with local state rebates for energy tax credits or utility rebates can increase your savings further.