For example, the average life of an air conditioner as part of an HVAC system is typically 27.5 years. If you have a commercial real estate HVAC system, the tax life increases to 39 years. However, a standalone HVAC unit has a much lower tax life of only seven years.
In general, most HVAC systems will last 15 to 25 years, but depending on the type of system and other contributing factors, that estimate can be highly variable. Even with HVAC maintenance and regular repairs, eventually, even the best boilers, furnaces, heat pumps, and air conditioners today will run their course.
Ducted AC Split Systems (or Mixed Ducted and Non-Ducted)
Individuals who purchase and place into service qualifying equipment between January 1, 2024, and December 31, 2024 may qualify for a non-refundable tax credit of up to $600 per system, subject to an annual limit of $1200 per taxpayer.
Commercial HVAC Equipment's Expected Lifespan
If you keep up with suggested maintenance, the average life expectancy of commercial HVAC systems is 15 to 20 years.
Typical fixed assets include buildings, furniture, large pieces of equipment, and systems such as lighting and heating, ventilating, and air conditioning (HVAC). Fixed assets are usually one-time investments and have longer life spans.
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.
It also depends on whether you use the HVAC for residential or commercial use. For example, the average life of an air conditioner as part of an HVAC system is typically 27.5 years. If you have a commercial real estate HVAC system, the tax life increases to 39 years.
Still, if yours is nearing the high end of the ranges below, it might be time to start thinking about a replacement: Central air conditioning units:12 to 17 years. Heat pumps: 10 to 16 years. Furnaces and boilers: 15 to 20 years.
If your commercial HVAC system is at least 15 years old and is starting to look like a big hunk of metal rusting away on top of your building, then it's high time to replace it. Keep in mind that old, shabby commercial HVAC systems are significantly less efficient and more expensive to maintain than a brand-new system.
On average, HVAC systems can last between 15 to 20 years. However, this can vary depending on factors such as maintenance, usage, and environmental conditions. If your system is approaching or has exceeded this typical lifespan, it may be worth considering a replacement to avoid potential breakdowns and inefficiencies.
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.
HVAC Regulation and Refrigerant Changes
Starting in 2024, the U.S. Department of Energy (DOE) raised the minimum energy efficiency standards for HVAC systems. For homeowners, this means that any new air conditioning unit installed must meet higher Seasonal Energy Efficiency Ratio (SEER) ratings.
As an average homeowner, the answer is generally no as most remodeling projects completed at your personal residence can't be written off. However, there are certain cases that can qualify your bath remodel as tax deductible. One would be medically necessary changes.
According to HomeGuide.com, the average cost to replace the HVAC units is $5,000 to $11,000; to replace the units with ductwork runs between $7,000 and $16,000 in total.
Do HVAC units qualify for Section 179? In short, yes; HVAC units qualify for a Section 179 reduction per tax code. In December 2017, Congress passed major tax reform, known as the Tax Cuts and Jobs Act (TCJA), which went into effect on Jan. 1, 2018.
Most ductwork will last for 10-15 years before you need to consider repairing or replacing it, even though it usually has a maximum lifespan of 20-25 years. It often begins to deteriorate much sooner than that. Deterioration happens over time because ductwork moves.
On average, business owners can expect the life expectancy of commercial HVAC systems to be anywhere from 10 to 20 years before they need major repairs. However, there's always a risk that faulty parts and minor issues will shorten the life of expensive components.
The main reason is that commercial systems are built to handle more equipment, which requires more energy and regular maintenance. They have professional ventilation and airflow controls, and their warranty and lifespan factors also differentiate them.
Off-peak seasons, such as spring or fall, often offer advantageous conditions for replacement, with potential rebates and lower demand for HVAC services.
HVAC is considered as part of the actual property itself, not as an "appliance". It would need to be depreciated over 27.5 years (assuming this is residential rental property in the US).
Different types of HVAC equipment are known to have longer lifespans than others. For example, geothermal systems can last anywhere from 25 to 50 years, while remaining extremely energy efficient. Both heat pumps and furnaces can remain operational for 15 to 20 years with proper maintenance.
The Benefits of AC Repair Tax Credits are numerous and can be a great way to save money on your taxes. The tax credits available for HVAC repairs, or Heating, Ventilation & Air Conditioning repair costs, allow homeowners to deduct the cost of certain types of repairs from their taxable income each year.
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.
Office furniture, certain vehicles, computers and off-the-shelf software are typically considered deductible expenses. In 2024 (taxes filed in 2025), the Section 179 deduction is $1,220,000. In 2023, the maximum Section 179 deduction was $1,160,000.
Whether or not you choose to take depreciation doesn't matter to the IRS. When you sell a property, the IRS levies a fee on the depreciation you should have claimed.