Under the Tax Cuts and Job Act, businesses are now allowed to fully expense all components of an HVAC system in the same year that they are acquired rather than depreciate them over 39 years. This means huge savings.
Before, the old accounting rule only allowed for a write off of a couple percent per year because of the long depreciation time. Because the new law allows the deduction of the full cost of HVAC equipment in the year of purchase, the tax savings are substantially larger. The ACCA has an infographic that breaks down the new law in simple matters:
So, what does this mean for you?
As you may already know, R22 is being completely phased out by 2020. This means you will eventually have to replace your HVAC unit if it still requires the use of R22 refrigerant. If you do not make the switch, repairs will become costly and you are putting of the inevitable of having to replace your system.
With the new tax break, making the jump to replace your HVAC systems will be easier as you can reduce your tax bill within the same year of purchase.
If your unit is failing and costing you with the frequent repairs, you may want to go ahead and start fresh with a new system. If a new system is in your future but you aren’t sure if you want to make the decision to change, take into consideration how tax laws can change frequently. You would not want to miss out on this opportunity.