Replace primary residence HVAC now? Or once I have tenants

32 Replies

Newbie here.

My HVAC needs to be replaced in my primary residence condominium. It’s still working but it needs to be replaced in the near future because it’s old.

I plan on moving out in six months and renting it out. Will be my first rental.

From a tax (and any other factors) perspective should I go ahead and replace it now or wait until I convert the property to a rental? From what I understand this would be a capital improvement which can be depreciated over 27.5 years but not sure how helpful that is and if it will help my spouse and I (both W2) on our personal taxes.

How old is it? I have had HVAC units last 20 years. I personally would not replace it till it starts having problems or fails.

@Nabeel Qureshi I agree that you should wait until it fails, unless you have a trusted AC company telling you differently.  If you are convinced about replacement, I would do it before you get a renter in the place, otherwise wait use use it until it is no longer economically repairable.

Thanks @Mike Wood and @John Underwood

It’s 41 years old apparently. When I bought the condo (no intention at that time to rent it out) the building manager told me it’s original and home inspector wasn’t sure  of age but said it might be. 

I had three HVAC companies come by and tell me it needs to be replaced as the building engineer said that too. 


41 years old! I kinda doubt that. I'd take a look at the label and then google how to interpret the numbers.

I'd love to know what you find out.

Still if it ain't broke ...

Put back some money so your ready when it does go.

I'm not an accountant and You should check with your accountant as to the tax part, general understanding is you can't deduct expenses/repairs while its owner occupied, but once it's a rental you can. Cost of improvements while you're using as a primary residence can potentially be added to your cost/tax basis for the home, but not depreciated like you mention. Easy question for any accountant and happy to be corrected by anyone in this forum. I'm wondering if you can find the month/year of manufacture on the HVAC unit as a 40+ year lifespan would be incredible and not very likely. Each brand/model has a way to find out the date it was made. I wouldn't replace it until it dies. Good luck!

Originally posted by @Eamonn McElroy :

If the HVAC can last another six months, it's generally more advantageous to wait until after there's been a change in use to trade or business property.

What do you mean by "after there's been a change in use to trade or business property."

 

@Bradley Padula @John Underwood so it's definitely 41 years old (as confirmed by the condo association engineer, building manager, multiple HVAC companies, and the manufacturer), its the original, granted its for a 1705 sq. ft. condo on the 6th floor so perhaps didn't run that much over the years (I have only been living here a year and it works fine!).  

Probably needs to be replaced soon, just figuring if I should do it now while I live here, or better to do it when its a rental...appreciate the input all!  And the BP community, so helpful :)

Just because the HVAC is old doesn't mean you should replace it.  I would wait until it fails before I replaced it.  If there is a current safety issue I would replace it immediately. From a tax perspective, you would be well advised to wait until it's a rental unit to make a replacement decision.  However, you need to consult a tax accountant to get their professional opinion.