Installing new HVAC equipment can take a bite out of business profits. But did you know that you can offset the expense with a federal tax credit for HVAC installation?
A few years ago, the IRS created Section 179, that lets you deduct the FULL PURCHASE PRICE of qualifying equipment (which includes replacement heating and air conditioning) purchased or financed this year.
Federal tax credit for HVAC: how it works
When you buy or finance HVAC equipment, you can write off the ENTIRE COST on your tax return. That includes the cost of installation.
If you have a larger business, here’s what to know:
- There is a limit of $1.22 million in deductions on total equipment purchases up to $3.05 million.
- There’s also a Bonus Depreciation clause that lets you deduct additional expenses up to the $3.05 million limit.
There’s a helpful website that explains the details and provides a calculator to help you figure out your potential savings: http://www.section179.org/.
How much can you save with a federal tax credit for HVAC?
Do you have commercial heating and/or air conditioning equipment that’s failing or nearing the end of its life? Replacing it now, instead of waiting for it to break down, will save you a lot of money.
Here’s an example showing how much you can save.
Businesses like yours are saving big
Recently Arista replaced an air conditioning system for a NYC retail store. On the first hot day of the year, the owner had turned on the AC unit and quickly realized it wasn’t working. His customers were walking out. The owner was pretty upset when he learned the compressor had failed and he needed a new air conditioner.
Even though it was an old unit, the $14,000 cost was not something he had budgeted for! Fortunately, we were able to show him how the new tax law would help him. It turns out that he’ll get a $5,000 tax deduction this year based on his HVAC equipment purchase and installation.
Imagine how much more a larger business can benefit from a federal tax credit for HVAC? Especially when it’s a planned expense and not a surprise.
We have another large client that has multiple locations and millions of dollars in HVAC equipment. A significant portion of that equipment is aging and likely to fail within a couple of years. With a planned replacement of equipment totalling $1.2 million by the end of the year, the company stands to save more than $400,000 in taxes!
If you have aging HVAC systems, you can enjoy similar savings. But this federal tax credit may not be available next year. It’s smart to take advantage of it now.
Reduce your tax bill and save on HVAC replacement
There has never been a better time to replace your old air conditioner. If you’re in NYC, contact Arista for trustworthy equipment recommendations and a free estimate.
