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Section 179 for HVAC: Get Paid Back Now!


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This is the season when we often reflect on missed opportunities from the previous year. Many small business owners have come to realize that they did not take advantage of one of the biggest business tax breaks, Section 179. While this deduction has been around for many years, it increased by $80,000 in 2023, making it the largest deduction ever offered to businesses.

Often, HVAC businesses are forced to deduct an asset’s value over several years. However, Section 179 allows you to take the entire depreciation deduction of certain equipment in a single year. What equipment qualifies can range from service trucks and security systems to contract dispatching software, and mobile apps. But more on the specifics in a minute.

The purpose of this incentive is to encourage small businesses to invest in themselves and improve the services they can offer. Keeping more of your hard-earned money can make a massive difference to your bottom line.

What You Need to Know About Section 179

  • American businesses can deduct 100% of the cost of eligible equipment, up to $1,160,000.
  • Purchases must be made between January 1 and December 31 of the tax year it is being claimed for.
  • Eligible equipment includes:
    • Computers and “off-the-shelf” software
    • Machinery and equipment
    • Office equipment and furniture
    • Heavy equipment such as construction machines, farming equipment, tree-work and forestry equipment, paving equipment, drilling rigs, and more
    • General building improvements like HVAC, security systems, fire systems, roofing improvements, and similar
    • Property attached to a building that is not a structural component, such as refrigerators, signs, and air conditioners or heaters.
    • Business vehicles (with some restrictions)
    • Eligible improvements to non-residential buildings like roofs, security systems, and HVAC
  • The equipment, vehicle and/or software must be used for business purposes more than 50% of the time.
  • Businesses can take advantage of 80% bonus depreciation on both new and used equipment for the rest of the year.
  • Specifics of this tax break change every year so make sure you freshen up on the details each year that you want to make a claim.

So, let’s break this down. In years past, if your company spent $50,000 on a new service truck, you would write off about $10,000 per year for five years. Now, you can write off the entire purchase price of that qualifying equipment purchase for the current year rather than waiting.

This has had a significant impact on growing businesses that need to make large purchases now to manage demands and business growth.

As an HVAC business owner, I encourage you to learn more about Section 179 and plan early to take full advantage of this benefit in 2024.

Want to learn more about Section 179?

We have compiled a few useful resources to help you out. We also encourage you to speak to your financial advisor to learn more about how it can help your HVAC company this year.

Like this article? Read the original blog here. Follow ThermoGrid on LinkedIn, Facebook and Twitter for more industry news!

ECI ThermoGrid is an ACCA Standard Corporate Partner. Click here to learn more about the benefits of becoming an ACCA Corporate Partner.

 

JG van Graan
Latest posts by JG van Graan (see all)

Posted In: Corp Partner Spotlight, Partner News, Taxes

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