Discussion:Depreciation of HVAC

Where in the world is any guidance for an a/c unit being 7yr property?

The term “structural components” includes such parts of a building as walls, partitions, floors, and ceilings, as well as any permanent coverings therefor such as paneling or tiling; windows and doors; all components (whether in, on, or adjacent to the building) of a central air conditioning or heating system, including motors, compressors, pipes and ducts; plumbing and plumbing fixtures, such as sinks and bathtubs; electric wiring and lighting fixtures; chimneys; stairs, escalators, and elevators, including all components thereof; sprinkler systems; fire escapes; and other components relating to the operation or maintenance of a building. However, the term “structural components” does not include machinery the sole justification for the installation of which is the fact that such machinery is required to meet temperature or humidity requirements which are essential for the operation of other machinery or the processing of materials or foodstuffs. Machinery may meet the “sole justification” test provided by the preceding sentence even though it incidentally provides for the comfort of employees, or serves, to an insubstantial degree, areas where such temperature or humidity requirements are not essential. For example, an air conditioning and humidification system installed in a textile plant in order to maintain the temperature or humidity within a narrow optimum range which is critical in processing particular types of yarn or cloth is not included within the term “structural components”. For special rules with respect to an elevator or escalator, the construction, reconstruction, or erection of which is completed by the taxpayer after June 30, 1963, or which is acquired after June 30, 1963, and the original use of which commences with the taxpayer and commences after such date, see section 48(a)(1)(C) and paragraph (m) of this section.

By definition HVAC equipment is a structural component of the building like plumbing and electrical systems. Therefore, it's always either 27.5 or 39yr property. To take it as 7 yr property is just plain incorrect.

Where is Section 179 not allowed for rental property which is not residential?

http://www.irs.gov/businesses/article/0,,id=134687,00.html

Cost segregationists make a living doing what Roy suggests.

I am suggesting, note this, that you must use your professional judgement.

If the facts in this case are 1. adding a HVAC unit to a metal building, 2. the unit is made up of three main components (one on a slab outside the building, an air handling unit inside the building, and duct work), 3. the building existed and was used before the installation of the HVAC, 4. minor modifications ,if any, were made to the actual existing building, then I would lean toward a 5 year life. This is because 1. the HVAC units will not last as long as the building, 2. the HVAC was not part of the building at the time it was constructed, 3. I have a hard time seeing, with these facts, that the HVAC is part of the structure of the building, (the Service's position is everything is a structural part of the building, which, the Courts have called into question).

Now, if the HVAC was part of the original construction of the building and the building was sticks and bricks that would be a different fact pattern.

I would suggest you read the referenced Court cases until you develope a feel for the issues. You may find one exactly on point.

RoyDale, the link you provided is consistent with 1.48-1, it doesn't supercede it, it says exactly what §1.48-1 says. §179 is only allowable for trade or business assets. Unless your trade or business is renting property, you can't take §179 on rental property.

Are you also saying, renting real property even one can not be a trade or business?