New Tax Law Allows Expensing of Commercial HVAC Installation in First Year

As of January 1st, 2018, changes in the new Federal Tax Code allow for 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 placed in service. Qualified real property includes commercial Heating, ventilation, and air-conditioning systems installed. Therefor, instead of depreciating the asset over 39 years, as previously required, the installation can be deducted in the same year the system is put into operation.

In summary, the cost of any commercial HVAC equipment placed in service after January 1, 2018 can now be deducted as a business expense under Section 179. This applies to purchases up to $2.5 million, with a $1 million deduction limit.

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