How much value does HVAC add to the house? Well, there's no exact and direct answer to that question but most real estate specialists agree that you should expect a 35-50% return on investment (ROI). Furthermore, a new HVAC system in a home can get buyers more interested in buying the house and hence close the sale.
Yes, installing a new HVAC system can increase your home value by 5% to 7% with a return on investment (ROI) of about 30%. This projected increase is especially true if you replace your current setup with an energy-efficient system, providing additional benefits to future buyers in the long run.
One common benefit of ductwork replacement is an increased efficiency in the operation of your HVAC system. Old ductwork can become cracked, dirty, and compromised, leading to your HVAC machinery having to work harder than necessary to heat or cool your home.
Federal Tax Credits
The Inflation Reduction Act (IRA) of 2022 makes tax credits available on high-efficiency HVAC units through 2032. It allows you to deduct 30 percent of the purchase and installation costs and caps the amount you can write off: Air conditioners, furnaces, boilers, and water heaters max out at $600.
New HVAC won't increase the value of your house however you need a working HVAC when you sell in most instances. If you can go without replacing it and fix it for now that would be sufficient. When you sell, you can always negotiate on HVAC and give credit if the buyer creates an issue with old working HVAC.
It's not because it's an HVAC unit; building improvements aren't traditionally eligible for tax deductions. However, if the improvements make your home more energy-efficient, you might be able to claim a tax credit that's usually valued at up to $2,500.
The Financial Impact of a New HVAC System Installation
This correlation between HVAC installation and increased home value is well-documented, making the upgrade one of the more cost-effective home improvements. On average, homeowners can expect to recoup 5-10% of the cost of the new system in added home value.
When it's part of your HVAC system, an AC unit's depreciation life is usually set at 27.5 years. If it's a stand-alone unit, the depreciation life decreases to around seven years. Systems in commercial real estate can be depreciated for up to 39 years.
The overall total limit for an efficiency tax credit in one year is $3,200. This breaks down to a total limit of $1,200 for any combination of home envelope improvements (windows/doors/skylights, insulation, electrical) plus furnaces, boilers and central air conditioners.
Qualified Improvement Property on HVAC qualifies when the assets are interior, but not when they are externally located. Qualified Improvement property examples for HVAC could be internal VAV boxes or ductwork. This affects HVAC bonus depreciation, internal components would qualify, but external components would not.
Duct replacement costs typically range from around $20–$60 per linear foot, based on our team's market research. For example, if your home has 100 feet of ductwork, a complete replacement can cost between $2,000 and $6,000.
Your homeowner's insurance won't cover cleaning, repairing or replacing your ductwork. What does a home warranty cover when it comes to AC units and ductwork?
Ductwork has a maximum lifespan of 20-25 years, and starts to deteriorate around year 15. If your ductwork is more than 15 years old, you may need to have the ductwork inspected to see if it is time to replace it. If it is older than 25 years, you almost certainly need to replace the ductwork.
How much does a new HVAC system cost for a 2,000 sq. ft. home? The costs range from $6,224 to $11,434, depending on the system type and installation requirements. Key factors include system size, type, efficiency, and local labor rates.
The ductwork project takes between 1 to 4 days. The ductwork is mostly impacted by the size of the project. If there are no unexpected challenges, then the system will take only a few days to install. In some cases, the installation can be completed in one day.
Homeowners can now get a tax credit equal to 30% of installation costs for highly efficient heating and cooling products, up to $600 for qualifying natural gas and oil furnaces. The qualification is dependent on what type of fuel it uses: Gas furnaces must be Energy Star-certified and have an AFUE of 97% or greater.
Homeowners Rate Trane Tops for 10th Year in a Row
The designation comes from the 2024 Lifestory Research Most Trusted® HVAC System Study. Lifestory Research surveyed more than 9,000 American homeowners who were actively researching HVAC systems between January and December of 2023.
The IRS offers several ways for taxpayers to cut their tax bills through investing in certain energy-efficient appliances and home improvements. This can include upgrades like energy-efficient water heaters, furnaces, air conditioners, and similar investments. To claim the credits, you'll need IRS Form 5695.
Installing a new HVAC system could increase your home's value by as much as $2,500-$3,000 or approximately 5-10% of the total value of your home. The typical cost of installing a new heating and cooling system is about $10,000.
The replacement of major building components (such as an HVAC system) must be treated as a capital improvement, recovering costs over the useful life via use allowance or depreciation expense in the CCAP.
Value Report found that the average American homeowner spends $22,636 on a new asphalt shingle roof of midrange quality. That new roof will increase the home's value by $15,427, on average. That works out to 68 percent of the investment.
How much value does HVAC add to the house? Well, there's no exact and direct answer to that question but most real estate specialists agree that you should expect a 35-50% return on investment (ROI). Furthermore, a new HVAC system in a home can get buyers more interested in buying the house and hence close the sale.
Most experts recommend getting three to five HVAC quotes from licensed, insured, reputable local heating and cooling companies. Getting multiple detailed HVAC quotes (but not too many) lets you compare the equipment, services, and prices of several contractors without being overwhelmed by options.