HVAC Equipment
Tax Incentives are now available for businesses who need to replace HVAC Equipment
Tax incentives are now available for businesses who replace HVAC equipment in 2018. Business owners can now realize benefits for equipment purchases not available before. The Tax Cuts and Jobs Act was signed into law at the end of 2017. It changed Title 26. U.S.C. Section 179 – Election to expense certain depreciable business assets. Specifically:
“A taxpayer may elect to treat the cost of any section 179 property as an expense which is not chargeable to capital account. Any cost so treated shall be allowed as a deduction for the taxable year in which the section 179 property is placed in service. . . Qualified Real Property applicable includes heating, ventilation and air-conditioning (HVAC) property.”
What does this mean to business owners?
Well, for facilities management teams, building owners and lessors, this could mean a significant tax savings for your business. In the past, purchases and/or lease of HVAC equipment had to be depreciated over time, making an often-unwanted and unplanned purchase a bigger burden. Now, this purchase can be expensed in the year it was put into service rather than depreciating over several years. The deduction limit is $1,000,000, with a spending cap of up to $2,500,000 and a Bonus Depreciation of 100% for 2018 if the spending cap is met.
The ability to expense this cost in the year the equipment goes into service is a great benefit. Combine that with improved efficiency and even possible utility rebates, it’s a win/win for businesses. There are no guarantees this tax incentive will be around after 2018, so this is the year to consider your options. Section 179 has been known to vary widely over the years. In 2007, the maximum allowable deduction was only $125,000.
To find out more about utility rebates for KCPL customers, visit Commercial Account Rebates. We also recommend any business considering their tax incentives consult a tax expert.
Our Balance Point team is ready to assist you with making a good decision for your company. We aren’t here to give you tax advice, but we are here to guide you on what equipment will work best for you. Now is the time to consider this investment and maximize your tax benefits. If you need help with a facilities maintenance plan for your commercial equipment, we can assist with that, too. For more information about our company’s commercial services, see Commercial HVAC Contractor.
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