New AC Tax Deductible

10 Replies


I am pretty new to BP and I am doing my best to study as much as I can to get ready to invest in the near future. I currently own and live in a condo in Los Angeles, Sherman Oaks specifically, and it looks like I may need to buy a new AC unit soon.

I was just wondering if a new AC unit would be considered a home improvement and be considered tax deductible? I also saw that some AC units actually get tax incentives and refunds.

If anybody has any recent experience with this, I would greatly appreciate any advice. Especially any HVAC companies/contractors you've worked with in the past?

Thanks in advance!

@Brandon Hall  could provide you with definitive answer, but I suspect things are not that much different for you than us.

If we are talking portable/window AC unit, then you could probably expense it - I would in Canada, particularly if it were only a few hundred dollars.

If you are talking central air or a mini-split unit which is fixed to the house, then it is a capital improvement and you will need to add it to your cost bases and depreciate it over time.

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@Pablo Pinasco it does however get added to your cost basis in the property should you sell at some point. This matters in case you are going to exceed the $250/$500k capital gains tax exemption on sales of primary residence in which you've resided for at least 2 of the last 5 years.

@Pablo Pinasco I am accreditation EnergyUpgradeCA contractor, however, I don't know or haven't used that part of my accreditation before. If only central AC, I don't think it's worth it, if you are changing something else, yeah. Each house wualifies for 6k of energy incentive.