QIP is defined as any improvement permanently affixed to an interior area of nonresidential buildings, placed in service after the building’s original construction was completed. While new construction or add-on construction does not qualify for bonus depreciation, QIP does include HVAC systems that are affixed to existing construction.
Why You Should Consider Financing an HVAC Retrofit Now
With the new CARES act, an HVAC retrofit may qualify for bonus depreciation. By financing an HVAC retrofit using a capital lease structure this year, the system can be paid for over time, while potentially writing off the entire cost of the system this tax year.
For buildings that are essential or have a higher traffic capacity – such as medical offices, manufacturing facilities, retail stores and warehouses – a business may want to seriously consider the benefits of an HVAC retrofit in the near future, particularly if the existing system is more than a decade old. An updated system can accommodate new filtration technologies – an especially critical component to reopening some buildings in our current landscape – and lower ongoing maintenance costs.
Financing allows you to align the energy savings with the finance payments. In some cases, these projects can be cash flow positive from day one. The bonus depreciation can even help to create your own “stimulus” by significantly reducing your taxes if you qualify.
If you have questions about financing an HVAC retrofit, reach out to us.
[DISCLOSURE]
The information provided in this blog does not constitute tax, accounting or legal advice. Please contact your own independent tax, accounting or legal advisor who considers all relevant aspects of your particular business and products.