The construction sector is fundamental in supporting economic growth and technological advances. Nonetheless, historically, we do not often consider this sector as innovative as it should be.

As our awareness and understanding of global warming is growing, the construction sector is often blamed for being an important contributor to greenhouse gas emissions. However, the sector is constantly moving and moving fast to reduce its emissions as a whole. Since LEED certification was created in 1993, the number of certified buildings continued to grow, reaching a total of 122 certified projects (USGBC, 2019) for the state of Massachusetts alone at the end of 2018.

What companies working in this sector often ignore, is that most of the activities involved in the design, development, and construction of greener buildings can be considered as R&D activities as per the tax code. Thus allowing companies like yours to benefit from the R&D tax credit. This additional source of cash can help companies cover a portion of the usually higher upfront costs associated with the construction of green buildings in comparison to standard ones, and therefore realize better margins.

Every time you try to implement or build something that is new to your company, and evaluate alternatives to optimize the environmental footprint of a design or a building, you may be doing R&D. To be more specific, the following list of activities gives a few examples of what qualifies as research and development:

• Improving the energy or water performances of a building;

• Designing or building passive houses or net-zero homes;

• Evaluate several orientations and shading options for a building to optimize its energy consumption;

• Improving the HVAC system or implementing a heat recovery ventilation system;

• Designing or building LEED-certified buildings;

• Evaluating construction materials to reduce the environmental impact of the building (soil permeability, heat insulation, etc.);

• Improving the insulation of a building;

• Improving the indoor environmental quality of a building.

Precisely identifying the qualified activities and capturing the costs associated can be tricky. It requires a thorough knowledge of the tax code and of the technical challenges of the construction sector. This is why at Leyton, we have tax attorneys, accountants, and engineers in-house, to help you claim this credit in a fast and efficient way.

For more information, and to see how we can help you, contact Maggie Crowley - mcrowley@leyton.com - 617-712-6759