Section 179 Deduction Includes HVAC Equipment Purchases
Are you a property owner or tenant who is considering purchasing HVAC equipment to modernize your commercial building? If so, you should be aware of the Section 179 deduction for HVAC equipment purchases and energy efficiency improvements.
Significant tax savings exist for small and medium-sized businesses; as a result, you may want to take the incentive to upgrade equipment.
Learn more about the Section 179 deduction for commercial HVAC equipment in this post.
Do HVAC units qualify for Section 179?
In short, yes; HVAC units qualify for Section 179.
In December 2017, Congress passed major tax reform, known as the Tax Cuts and Jobs Act (TCJA), which went into effect on Jan. 1, 2018.
The TCJA brought new changes for depreciating and expensing, including an update that makes HVAC equipment purchases a qualifying property in the Section 179 deduction.
Before Jan. 1, 2018, HVAC equipment was considered a capital improvement, instead of a business expense.
Section 179 Deduction for Commercial HVAC Equipment
Now, Section 179 “allows your business to write off the entire purchase price of qualifying equipment for the current tax year” (Section 179.org). (Emphasis mine.)
In 2021, businesses can deduct the full price of qualified HVAC equipment purchases, up to $1,050,000. There’s a total equipment purchase limit of $2,620,000.
- 2021 deduction limit: $1,050,000
- 2021 spending cap: $2,620,000
- Bonus depreciation (on both new and used equipment): 100%
This can enable businesses to buy the equipment they need sooner. Prior to this update, you would have to depreciate the equipment over 39 years; getting a little amount back overtime.
Now, you can get a rather immediate savings. This tax break can help businesses replace their old equipment and upgrade to better technology.
“This tax break can help businesses replace their old equipment and upgrade to more efficient equipment.” —Ted Atwood, Chief Refrigerant Geek
In the past year alone, there has been more focus on HVAC systems and COVID-19 In fact, there’s a large trend currently that points to property owners and managers making retrofits with new HVAC systems to appease occupants and make them feel safer and healthier.
More so than ever, awareness of the Section 179 deduction for commercial HVAC equipment purchases is crucial.
With so many changes happening in the HVACR industry, including as it relates to tax code, this Section 179 deduction is welcomed widely by stakeholders—from the commercial contractor to the building owner.
Better Track New Installs and Decommissions Now
Do you need a better way to track new equipment installations, retrofits, and decommissions? Here are three ways Trakref can help you do so now:
- When an install happens (perhaps you’re replacing a broken system), trakref refrigerant compliance management software will notify you.
- When the install occurs, trakref will make sure you capture all the needed data.
- When removing a system, trakref will alert you and document the removal per regulatory requirements and industry best practices.
In fact, all of the activity and work performed by your team will be ready for you to use when filing. Yes, the Refrigerant Geeks at Trakref have got your back; we simplify HVACR and refrigerant compliance for you.
Check out our FREE checklist of the top 10 things property managers need to know about their HVACR systems. Now updated with Section 179 information!Get the HVACR Top 10 Checklist for Property Managers
Well, that concludes our take on the Section 179 deduction. Do you have any questions about Section 179 for HVAC that you would like answered? Let us know by leaving a comment below. 👇👇
As always, thanks for joining us. Right here on the Trakref blog.