One of the biggest pieces of legislation that came out of 2020 was the Coronavirus Aid, Relief, and Economic Security (CARES) Act. As the COVID-19 pandemic swept the country, American legislators worked fast to pass the CARES Act in order to protect America’s people and businesses—and their HVAC systems.
That’s right: Section 168 of the CARES Act includes a 100% write-off on qualifying facility improvement costs, like critical HVAC system upgrades that can protect the health and safety of teams heading back to work.
So, What’s Different?
Before the CARES Act passed, investing in facility upgrades resulted in a tax deduction over a 39-year period, with a 2.5% write-off applied each year. Now, the CARES Act allows for a full dedication of qualifying project costs in a single year, including HVAC projects like installing a new system. Plus, there are no limitations on the project size and the deduction can be combined with other incentives, like renewable energy tax credits or utility rebates. There’s never been a better time to tackle your biggest HVAC needs!
What are the CARES Act Qualifications?
All non-residential properties are considered qualified improvement properties (QIPs):
- Hospitals and healthcare facilities
- Office buildings
- Factories and plants
- Logistics facilities
- Any other non-residential properties
In addition, facility upgrades that are eligible for the accelerated deduction must be non-structural changes to the interior envelope of existing facilities, such as:
- Building management systems
- Sensors, values, actuators and other HVAC devices
- Uninterruptible power supplies, switchgear and other electrical distribution equipment
However, it’s important to keep in mind that the Section 168 deduction does not cover the changes outlined below:
- New constructions
- Upgrades to facility structure
- External envelope upgrades
- Residential structures
- Certain equipment such as elevators
Ready to take advantage of this huge HVAC-upgrade incentive? Reach out to the CTM team to get started!