The benefit of doing work on your property to meet ADA standards is twofold. Firstly, it helps to create a safer, more friendly, environment for your tenants and guests and reduces your liability. Secondly, there are associated tax credits and deductions applicable to improvements on your property by employing US tax codes – 26 U.S. Code § 44 and 26 U.S. Code § 190, both of which can be used for a tax return in the same year.
Tax Credits and Deductions
Benefits of doing ADA compliant repairs
The tax credit, established under Section 44 of the Internal Revenue Code, was created in 1990 specifically to help small businesses cover ADA-related “eligible access expenditures.” A business that for the previous tax year had either revenues of 1,000,000 or less OR 30 or fewer full-time workers may take advantage of this credit.
Tax code 44 allows a for a $5,000 maximum tax credit on expenditures towards access improvements. The amount of the tax credit is equal to 50% of the eligible access expenditures in a year, up to a maximum expenditure of $10,250. There is no credit for the first $250 of expenditures. Therefore, the maximum tax credit allowable is $5,000.
The tax deduction, established under Section 190 of the Internal Revenue Code, is now a maximum of $15,000 per year. A business (including active ownership of an apartment building) of any size may use this deduction for the removal of architectural or transportation barriers. The renovations under Section 190 must comply with applicable accessibility standards.