If you are a small business owner in need of an HVAC or refrigeration system upgrade, this could be the perfect time! Signed into effect in December 2017, the Tax Cuts and Job Act offers benefits not previously available. While Section 179 is not new, the way it benefits small to medium size business owners is. In previous years Section 179 was geared toward the purchase of automobiles and was capped at $500,000. This year, however, the Section 179 deduction can now be applied to both purchased and financed HVAC equipment purchases up to $2.5 million, with a $1 million deduction limit.
For example, under previous rules, you could only deduct around $1540 per year of a $60,000 investment. At a 35% tax rate, you would only save around $539 per year. Under the new law, you may save $21,000 in taxes immediately on that same $60,000 purchase.
Section 179 has changed drastically in the past and there is no guarantee that it will stick around for 2019. Act now and maximize your tax benefits!
For more details on Section 179 for 2018 go to: UnderstandingSec179
R-22 Refrigerant, better known as, Freon is the most common refrigerant for systems installed before 2010. The US Environmental Protection Agency categorizes the refrigerant as an “ozone-depleting” chemical and has officially begun the process to phase out its use. Though the production of equipment requiring R-22 ended in 2010, the production and import of Freon continued so that existing units could still be repaired. We are now nearing 2019, which means we are approximately one year from the official end of the production of R-22.
What does this mean for you?
The end of R-22 production does not mean it will be impossible for you to continue use of your old system. What it does mean is, after January 2020, those who are still using an old system, will likely find repairs very challenging. Even simple fixes often involve the use of additional refrigerant, which will be scarce and quite expensive. This leaves you with two options, you can either update your system to use an alternate refrigerant or you can upgrade to a new, more energy efficient, system.
A few factors to consider when choosing between these options include: energy efficiency, the age of the system, performance history and overall condition of the system. Those owning an HVAC system that is relatively new, efficient and well maintained may opt to convert the system. If the system does not fall into those categories, it may be in one’s best interest to replace the system entirely.