2018 Tax Reform Helps Pay for Commercial HVAC Equipment

TAX CODE CHANGES: WHAT’S NEW AND HOW IT AFFECTS YOU

New tax changes took effect this year, including changes to Section 179 of the IRS tax code that specifies how businesses can deduct equipment purchases. Under the new Section 179 tax rules for 2018, businesses can deduct the FULL PURCHASE PRICE of qualifying equipment purchased or financed this year.

Luckily for those in need of new or replacement heating and air conditioning, “qualifying equipment” includes HVAC systems.

As you may know, in the past businesses could deduct these expenses only in small amounts by depreciating the cost over a period of years (sometimes decades). Unfortunately, those small savings weren’t much help in paying for a large expense like a new HVAC system.

For 2018, things have changed dramatically. When you purchase or finance new HVAC equipment this year, you’ll get a substantial tax deduction… enough to help offset the expense. That takes a lot of the stress out of making a large investment in equipment!

SECTION 179: HOW IT WORKS

When you buy or finance HVAC equipment in 2018, you can write off the ENTIRE COST on your 2018 tax return. That includes the cost of installation. No more long 20-year depreciation schedules.

If you have a larger business, there are a limits you should know about:

  • Under section 179, there is a limit of $1 million in deductions on total equipment purchases up to $2.5 million.
  • In 2018 there’s also a Bonus Depreciation clause that lets you deduct 100% of additional expenses up to the $2.5 million limit.
  • And, you can still depreciate additional equipment expenses up to $3.5 million over a period of years.

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/.

ac unit

ac unit

WHO CAN TAKE ADVANTAGE OF SECTION 179 TAX BREAKS?

Assuming you spend less than $3.5 million on equipment, any American business can take advantage of the Section 179 tax break on equipment purchases. To get this year’s benefits, the new equipment must be put into service by December 31, 2018.

Also, it’s a good idea to check with your tax advisor for details about the new deductions and to learn about bonus depreciation for larger purchases.

THE R22 BAN: ANOTHER REASON TO REPLACE NOW

Is your air conditioning system more than 10 years old? If so, it probably uses a refrigerant called R22 (also known as Freon). That refrigerant is being phased out by the EPA because it has caused considerable damage to the Earth’s ozone layer. In 2020, R22 will be completely banned in the US.

What does that mean for you? If your air conditioner uses R22, it will get increasingly expensive to fix when it breaks. That’s because, as the supply of R22 dwindles, the cost is rising dramatically.

So, save yourself what promises to be an exorbitant expense (repairing your old R22 air conditioner). Instead, replace it in 2018 and save a bundle. Once R22 is banned, you’ll be faced with having to replace your old unit or potentially incur a costly expense retrofitting the equipment with alternative refrigerants (that may or may not be compatible with your system). Why not replace the equipment it now and get the tax break?

DODGE EXPENSIVE REPAIRS

Older air conditioning systems usually break down at the worst possible time – in the extreme heat, forcing you to spend thousands of dollars on out-dated equipment just to get it running as quickly as possible. A planned replacement will have your AC down in the fall or winter when it’s NOT crucial to your business.

ENERGY SAVINGS ON NEW EQUIPMENT

Energy-Efficient. Commercial buildings use significant amounts of energy every month. This translates to a large portion of your company’s utility bill. A new, energy-efficient system can easily save you up to 50%.

Comfort. A new system means consistent temperatures, humidity control, and better air quality for your employees and your customers.

Warranty. Buying a new system means that you can breathe a sigh of relief and trust that your system is covered under warranty. Our heating and cooling systems come with warranties that allow you to make repairs if needed. No matter what the weather throws your way, a new system will keep you comfortable inside and offer the reliability, energy efficiency, and comfort that you require for your business.

ABOUT EMI MECHANICAL

Whether you’re responsible for the installation of a new HVAC system or repairing and maintaining existing equipment, EMI Mechanical has the experience to service and maintain any system throughout its lifecycle. Across central Mississippi, we’re recognized as one of the region’s most respected and referred HVAC experts. When you purchase a preventive maintenance service agreement from EMI, you’re backed by an industry leader with that has earned its reputation over 60 years of trustworthy business conduct and quality service.

PEACE OF MIND AT A FAIR PRICE

Your account is managed by an EMI project manager and backed by an expert staff of over 100 highly trained professionals. EMI boasts a comprehensive program of continuous staff training and professional development on state-of-the- art practices and processes.

EMI customers also enjoy these benefits:

  • Quick-to-respond, accessible workforce and a fleet of 65+ vehicles
  • 7 days a week emergency standby service
  • In-house 7,000 sq ft sheet metal fabrication shop
  • Over 60 years of trusted, professional service, design and installation

trane units

We invite you to call us for a quote on your equipment purchase or service needs. We think you’ll agree that hearing what we have to say will be one of the best decisions you make in researching your HVAC needs.