Building Owners Earn Big Tax Break for New HVAC

HVAC Retrofits Bring Big New Tax Breaks

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We recently heard some great news from our tax advisors: Cambridge Engineering customers can immediately deduct 50 percent of the cost of our HVAC equipment when it is installed as a retrofit in a commercial building. The new rule applies to a variety of building improvements and renovations made in 2016 and 2017 – and HVAC equipment is included as an eligible deduction.

This is a big win for building owners! If you’ve been considering replacing your facility’s old or inefficient space heating and ventilation equipment, now is the time to do it.  The 50 percent “bonus deduction” will taper down to lower percentages after 2017, and will go away completely in 2020.

Accelerate Your Depreciation on Building Improvements

This gift from the IRS marks a significant change from past deduction allowances. HVAC equipment has always been considered part of the physical structure of the building, so until now it could not be depreciated at an accelerated rate in the same way that capital equipment can be depreciated. In the past, building improvements have been depreciated over 39 years. That’s a pretty long time to realize the benefits, and not much of an incentive to invest in building improvements.

Now, with the new rules, that’s all changed. Tax deductions for building improvements should be on everyone’s minds this year and next.

Save Energy Right Away with HTHV Technology

Here’s another reason to act soon: when you replace old equipment with Cambridge’s HTHV (high temperature heating and ventilation) products, you’ll notice a big difference right away on your utility bills. If you’re replacing old boilers the savings can be as much as 40 to 70 percent. You’ll save at least 20 percent when you replace gas-fired, standard unit heaters.

You can’t argue with those numbers. Our customers have enjoyed significant savings on their energy bills!

Cambridge HTHV is an investment that keeps paying for itself because of the remarkable energy efficiency.

Find Out More

Want to learn more about the new tax perks for commercial buildings? Here’s a great article from our tax advisors:  http://www.uhy-us.com/News-Events/Article/752/New-2016-Tax-Perks-of-a-Company-Interior-Building-Renovation

We urge you to talk to your tax advisor or CFO about your commercial building and how you can qualify for what the IRS is calling Qualified Improvement Property. Just remember that after 2017, the tax benefits begin to shrink. So it’s in your best interest to invest sooner rather than later.

Besides HVAC, the tax deduction can apply to improvements to lighting, electrical, plumbing, permanent floor coverings, and non-load bearing walls. Again, half of the cost of these expenditures can be deducted in the year the assets are placed in service. This could be a significant benefit for any companies with plans to remodel.

Thanks for taking the time to read our blog. We value every customer and strive to bring you timely, helpful information to make your job and your company a success!