Commercial HVAC and the “Million Dollar Tax Deduction”

HVAC Section 179 Means Huge Savings for Commercial Property Owners As They Upgrade Their Equipment

We’ll cut right to the chase: did you know you can deduct up to a million dollars from your taxes using Section 179 of the tax code? That’s the maximum deduction allowed in one year if you upgrade HVAC equipment purchases totaling up to $2.5 million dollars.

Tax Deductions to Promote Green Energy

We’ve been fielding a lot of questions about this, and frankly, it’s not a surprise. This element of the Tax Cuts and Jobs Act was created as a way to incentivize the business sector to save energy. Few are aware that one of the advantages of buying a new HVAC system is that today’s heating and cooling equipment is far more energy-efficient than the models of years past, which usually relied on R-22, also known as Freon. Freon has since been discontinued, as it’s been shown to be a major source of ozone depletion for our environment. In addition, these older models simply didn’t have the new technologies that today’s HVAC does, innovations that allow this equipment to do more with less. Along with the tax deduction, new HVAC will also allow you to save big when it comes to your utility costs, compared to the expense of running these older systems.

New Savings, New Rules

This incredible tax savings is a relatively new development in the glacially slow world of our federal tax code. In the past, you’d only be allowed to deduct a small percentage of your new HVAC costs, amortizing it over the projected 39-year lifespan of your building (and don’t ask why the IRS has decided buildings “live” exactly 39 years, but that’s another blog post). The important point is that the former tax rules only added up to about a $40,000 savings per $1 million of new heating and air conditioning equipment. In contrast, this new incentive allows you to expense up to $1 million dollars in a single 12-month period for new or used heating and air conditioning equipment and its installation.

So word to the wise: don’t wait on upgrading your HVAC.  Along with adding proven resale value to your commercial building, you’ll save energy, and money in terms of operating costs, along with promoting superior indoor comfort. Section 179 is one of those rare tax loopholes that everyone should know about, so pass it on!

Have questions? Call us today to discuss, or ask your favorite tax professional. You can also learn more from our Write It Off white paper.

Air-Tro is committed to providing all our commercial customers with the information and resources they need for energy-efficient, high-performance HVAC.  We’ve been keeping California comfortable since 1969. Call us today at 626 357-3535.