The 35% Rebate that no one is talking about

In case you missed it, effective January 1, 2018, via the Tax Cuts and Jobs Act Section 179, all components of an HVAC system can be expensed immediately instead of being depreciated over 39 years. 

Qualified applicable property includes heating, ventilation, and air-conditioning property.

Previously the maximum deduction was $500,000 depreciated over 39 years. Now the maximum deduction is $1 Million and can be deducted immediately. 

What does this mean for the owner of a commercial building?

Here is an example put together by HARDI: 

A business owner installs a new heating and air-conditioning rooftop unit. The equipment and labor for installation cost $14,000. Under old depreciation rules, the owner could only claim approximately $350 in depreciation expense annually over 39 years. Under the new law, the owner can deduct the full cost of the HVAC equipment (including installation costs) of $14,000 from their business income the year of the purchase and installation. At the top marginal tax rate that would be applied to this purchase, this will save the business owner $5,180 in taxes.

Check out the infographic below from HARDI. Help us educate your team and your customers about this new provision. 

And as always, be sure to consult your tax professional.

Travis Hunt
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