HVAC Special Tax Benefits for Corporations for 2019

HVAC Retrofits placed into service in 2019 can be written off for tax purposes at 100%

When considering an HVAC equipment replacement in 2019, a change to the federal income tax code can provide a substantial benefit.

The Tax Cuts and Jobs Act of December 22, 2017 amended Section 179 to now include HVAC retrofits as a qualifying property improvement. Subject to certain limitations, corporations (taxed separately as C Corps) can now expense 100% of an HVAC equipment replacement for existing buildings in 2019.

This can dramatically change the after-tax benefit of a HVAC change-out. Below is a simple example of a $300,000 chiller replacement project. Note how the after-tax simple payback improves from 5 to 4 years. At the 21% tax bracket, the after-tax cost of a $300,000 chiller replacement for a corporation would be $237,000 (300,000 X .21 = 63,000 in tax savings; 300,000 – 63,000 = 237,000, the real cost of the project)

The changes to Section 179 also apply to rooftops and systems related to fire protection, alarms and security. See this link to learn more:

https://www.irs.gov/newsroom/new-rules-and-limitations-for-depreciation-and-expensing-under-thetax-cuts-and-jobs-act

For flow through entities, such as some LLC’s or partnerships, see the link below to learn how Section 199a can benefit owners:

https://www.irs.gov/newsroom/tax-cuts-and-jobs-act-provision-11011-section-199a-qualified-businessincome-deduction-faqs

Please note EnFlux Building Solutions does not provide tax advice and your customer should check with tax counsel as to the benefits from the change in tax law from the Tax Cuts and Jobs Act of December 22, 2017.

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