The recently passed Tax Cuts and Jobs Act included a provision that will be a major tax break for building owners and tenants that invest in commercial HVAC equipment in 2018.
26 U.S. Code § Section 179 states:
“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 place in service.
Qualified Real Property applicable includes heating, ventilation, and air-conditioning property.”
How Exactly Does Section 179 Help Building Owners and Tenants with Commercial HVAC Equipment Investment?
Prior to the recent change in Section 179, all commercial HVAC equipment was considered a capital improvement to the building, and therefore not included in Section 179. This meant that investments in HVAC equipment depreciated over 39 years, allowing for little to no tax deductions for spending on the equipment.
Now, for purchases of new and used HVAC equipment up to $2.5 million, equipment costs can be immediately deducted as a business expense, with a deduction limit of $1 million. This will lead to major tax breaks for building owners and tenants who invest in new commercial HVAC equipment in 2018.
How to Take Advantage of Section 179 Find Upfront Savings
For those considering new high-efficiency HVAC systems, or simply need to replace aging HVAC units, it’s important to take advantage of Section 179 savings before the year is over. Section 179 changes every year. This tax break may not be available in 2019.
This level of upfront savings is hard to ignore. The best way to take advantage of Section 179 while it’s still available is to connect with an experienced commercial HVAC provider. A contractor with a long history of commercial HVAC systems installation can walk you through the details of Section 179 and help you get the most out of the tax break.
Section 179 is a rare opportunity for building owners and commercial tenants. Those who act now to take advantage of this deduction before it’s gone will see huge tax breaks on new commercial HVAC equipment.