Tax Cuts: Commercial HVAC Equipment can Potentially be Fully Deducted in the First Year.
The Midwest is continuing to reopen for business as restrictions are lifted. Businesses are preparing to move back into their facilities, creating a need for maintenance and engineering services. As the peak of summer heat approaches, we are geared up to take on the demand for expert HVAC advice.
A key focus is ensuring we guide facility managers and business owners to re-open in the most efficient way possible to help their business grow. For example, deciding the appropriate time to repair versus replace your equipment can help to cut costs.
If you own or manage a building preparing to reopen, here is what you need to know:
- According to the 2017 Tax Cuts and Jobs Act (TCJA), section 179 states that Commercial HVAC equipment can potentially be fully deducted in the first year subject to certain limitations.
- The 2020 CARES Act: The recently-passed Coronavirus Aid, Relief, and Economic Security or “CARES” Act contains several significant tax changes for businesses. One of these tax changes may benefit non-residential building owners interested in investing in HVAC mechanical system upgrades and replacements, and when combined with utility rebates, could further offset equipment costs.
- What has changed in the tax laws? Pursuant to the CARES Act, the cost of HVAC equipment and system components made to the interior of a building, among other items, which are considered “qualified improvement property” or QIP under IRS tax code Section 168, can now be fully deducted for tax purposes in the first year it’s placed in service versus over a 39-year period. For commercial buildings, the cost of HVAC equipment and Building Automation Systems installed or upgraded in 2020 may be fully deducted as a business expense, and there is no stipulated limitation on the cost that may be expensed.
For a consultation with an Enervise HVAC engineering expert to discuss your facility, contact us at 1-800-845-4839 or visit our website. We recommend speaking with your tax advisors to clarify eligibility for the deductions mentioned above, as we are experts on HVAC solutions and not certified to be tax advisors.
