In an environment where hotel guests require technological amenities such as hotel apps and Wi-Fi, one that is expected to become more common throughout the industry is the electric vehicle charging station, commonly known as the EV station. With the expectation that electric vehicles usage will expand during the next decade, hotel guests will look for convenient places to charge their vehicles while on the road. The installation of EV stations can be a competitive edge for hotels and may eliminate stress for many traveling drivers, wondering where their next vehicle charge will occur.
Hotels are finding the installation of EV charging stations are bringing in numerous benefits including
- Tax incentives
- Making the property more appealing to a growing subset of hotel guests
- Corporate social responsibility, giving your property a green image
- Potential additional revenue stream
- Public visibility via various EV charging apps and programs
One interesting benefit for installing EV charging stations is a 30% business credit, up to a maximum of $30,000 of the cost of a “Qualified Alternative Fuel Refueling Property” placed in service by December 31, 2017. The credit was originally going to end as of December 31, 2016, but was retroactively extended one year by the Bipartisan Budget Act of 2018.
Taxpayers investing in Qualified Alternative Fuel Refueling Property should monitor future legislative developments, for potential extensions of the credit. Each property cost must first be reduced by any section 179 expense deduction taken for the property. The credit attributable to depreciable property (refueling property used for business or investment purposes) is treated as a general business credit.
For example, if a hotel installs electric charging stations costing $50,000, the hotel owner would obtain a federal income tax credit of $15,000. After reducing the tax basis by the amount of the tax credit, the owner would be eligible for 50% federal bonus depreciation of $17,500, as well as their normal depreciation on the remaining undepreciated balance. The taxpayer will then be able to depreciate the remaining balance over a five year life. Those taxpayers who placed the charging stations in service between September 28, 2017 and December 31, 2017, are eligible for 100% bonus depreciation, with no additional depreciation in future years.
As previously noted, taxpayers can also avail themselves of the section 179 expense deduction for any charging station acquisitions in excess of those which would generate a tax credit subject to normal limitations.
In addition, at least one nationally known company that supplies EV charging stations for vehicles they manufacture has a program in place for qualified properties to receive the first two EV stations at no cost if they meet program conditions, including that the station be installed in a visible or convenient location
As EV technology continues to evolve, the installation of EV charging stations by hotel owners will be more common in the future and an interesting opportunity for the present.