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As a custom home builder, you're in the business of creating dream homes for your clients—but are you building wealth for yourself? The construction industry offers numerous opportunities for tax savings that many builders overlook. With proper planning and strategy from our experts at Whittmarsh Tax & Accounting Services, you can significantly reduce your tax liability while keeping more of your hard-earned profits in your pocket.
Equipment and Tool Deductions
Your construction equipment and tools are essential for business operations, and whether you purchase or rent them, many of their associated costs can be deducted. This covers heavy machinery, power tools, safety equipment, and even smaller hand tools. Don't forget about maintenance costs either—any repairs and upkeep on your existing equipment are fully deductible.
Vehicle and Transportation Expenses
Construction companies do a lot of driving. You visit different construction sites, pick up equipment, conduct business at the bank, pick up supplies, meet with partners, and much more. According to the IRS, businesses can claim a standard mileage rate of $0.655/mile. Keep detailed logs of your business mileage to maximize this valuable deduction.
Materials and Supplies
You can deduct the money spent on construction materials used in your building projects, such as lumber, concrete, and electrical and plumbing supplies. This includes all the consumable supplies that keep your projects running smoothly—fasteners, adhesives, paint, and safety gear.
Home Office Deduction
If you manage your construction business from a home office that is used exclusively for business purposes, you can deduct part of your home expenses. You can calculate the percentage based on square footage or use the simplified method of $5 per square foot. This can be one of your most valuable deductions if you maintain a dedicated workspace.
Section 179 and Depreciation Benefits
Big purchases like trucks, heavy machinery, trailers, and expensive equipment don't just disappear from your balance sheet. Instead, they depreciate over time, and you can deduct a portion of their cost each year. If you want to deduct the entire cost upfront, Section 179 allows you to do just that for certain purchases.
Self-Employment Tax Deductions
As a small business owner, you're responsible for paying all employment taxes. However, you can offset this expense by deducting half of the self-employment taxes you pay during the year. This often-overlooked deduction can provide substantial savings.
Professional Development and Education
Any money spent on trade certifications, licensing courses, industry seminars, and online training is tax-deductible. If you take a course on new construction techniques, enroll in a business development workshop, or attend an industry expo, those costs can be written off.
The construction industry is uniquely positioned to benefit from energy-related tax credits. Starting in 2023, single-family, multifamily, and manufactured home builders who meet certain energy efficiency requirements can benefit from quite a bit of tax savings through updated 45L credits.
Even larger credits are available for companies that build homes certified as "Zero Energy Ready" as part of the Department of Energy's ZERH Program. Such homes are built in such a way that "a renewable energy source could offset most or all of the homes energy use".
Too many custom home builders wait until tax season to think about their tax strategy. This reactive approach often results in missed opportunities and overpaid taxes. Meaningful tax reduction strategies require pro-active implementation and investment, and they're not something that you tack on at the end of the year.
At Whittmarsh Tax & Accounting, we understand that custom home builders face unique financial challenges and opportunities. Our specialized approach goes beyond basic tax preparation to provide year-round strategic planning that keeps more money in your business.
Comprehensive Outsourced Accounting Services
We help business owners take control of their business, taxes, and financials. We provide bookkeeping services, tax reduction strategy, business tax return preparation and outsourced CFO services. Instead of managing multiple vendors or burdening your team with accounting tasks, we handle everything under one roof.
Industry-Specific Expertise
Our team of tax accountants specializes in providing tailored tax services for small construction businesses. We offer accurate and efficient business tax preparation, proactive planning to minimize taxes, and comprehensive accounting services to ensure precise financial records.
Proven Tax Savings Results
We've found that typically, we're able to find thousands in tax savings within the first year of working with us, and then we're able to identify and implement some significant long term tax reduction strategies. Our comprehensive tax reduction planning services are designed specifically to minimize your tax liability while ensuring full IRS compliance.
Year-Round Support and Guidance
We're not your typical "year-end" tax and accounting firm. We serve as your outsourced accountants throughout the year. We'll handle everything so you can stay focused and profitable. Our integrated approach combines bookkeeping, payroll, tax planning, and business advisory services to provide a complete financial solution.
Successful custom home builders like Davis Contracting, Moderno Construction Management, and Bettencourt Construction work with expert accountants. Let our team at Whittmarsh help you implement strategic tax planning that protects your profits and supports your growth.
Procrastination leads to overpaid taxes and more stagnation. The best time to start optimizing your tax strategy is now, not at year-end when your options are limited.
Ready to stop overpaying in taxes and start building wealth for your future? Contact us today to schedule a comprehensive tax and accounting consultation. Our team will analyze your current situation, identify missed opportunities, and create a customized plan to minimize your tax burden while maximizing your profits.