How can these tax changes impact your business?
Aging or inefficient mechanical systems are one of the largest costs to a facility and are often costly to upgrade, retrofit or replace. Additionally, with the current health crisis, extra expenses for cleaning and safety have absorbed any cash that was planned for capital improvements.
Building owners are also considering upgrading their HVAC systems to improve indoor air quality through supplemental air cleaning services and technologies. Taking advantage of extra after-tax cash flow and utilizing additional rebate programs for upgrading systems can make the process easier and less expensive.
If cash flow is a concern, you can finance the improvements and still take advantage of the CARES Act’s 100 percent deduction. With these tax changes, upgrades, and improvements, the more energy-efficient systems may yield:
• Increased return on investment for new capital expenditures;
• Reduced payback period for capital investments;
• Even deeper savings when combining these benefits with additional local energy incentive programs;
• A depreciation bonus of 100 percent of the equipment and installation cost this calendar year; and
• Energy and money savings on utilities and compliance with local laws.
Many savvy building and business owners are looking ahead at the capital improvement scheduled in the future. They are accelerating the improvements into 2020 to take advantage of the deduction, while using creative financing (interest rates are at an all-time low) for the funding.
Finding the right team that can help you navigate and execute your HVAC and mechanical equipment, or system options is important.
Editor’s Note: Vanguard is not a tax advisor. Customers should always consult their tax experts and advisors in application of tax laws as it relates to their corporate or partnership structure and business operations. Each customer must assess its actual impact.
David Forman is vice president of Vanguard Building Solutions. Learn more at vbs-energy.com. Vanguard Building Solutions, LLC is a national provider of multidiscipline building solutions and energy savings strategies. Founded in 2013, VBS has been working with all size organizations, helping them make building improvements, save energy and money, and reduce greenhouse gas emissions.