New Tax Law Allows Expensing of Commercial HVAC Installation in First Year

As of January 1st, 2018, changes in the new Federal Tax Code allow for the cost of any section 179 property as an expense which is not chargeable to capital account. Any cost so treated shall be allowed as a deduction for the taxable year in which the section 179 property is placed in service. Qualified real property includes commercial Heating, ventilation, and air-conditioning systems installed. Therefor, instead of depreciating the asset over 39 years, as previously required, the installation can be deducted in the same year the system is put into operation.

In summary, the cost of any commercial HVAC equipment placed in service after January 1, 2018 can now be deducted as a business expense under Section 179. This applies to purchases up to $2.5 million, with a $1 million deduction limit.


Federal Renewable Energy Tax Credits Are Back!

The 30% federal tax credit for geothermal heat pumps in the residential sector and the 10% credit for qualifying commercial geothermal installations has been reinstated. They are also retroactive to cover any installations done since the last Federal Tax Credit sunset in December 2016. The tax credits will remain in effect until December 31, 2019, at which point they’ll begin a phase-out. For 2020, the residential credit will move to 26% and in 2021 the final incentive will be 22%. In addition to the Federal Tax Credit, residential installations qualify for utility rebates from PSEG-LI of up to $2000 per ton.

Key Features

• 30% of total system cost through 2019
• 26% of total system cost in 2020
• 22% of total system cost in 2021
• No limit to credit amount
• Can be used to offset AMT tax
• Can be used in more than one year
• Can be combined with solar and wind tax credits
• Can be combined with energy efficiency upgrade credits

How to claim the Credit
Use IRS Form 5695 to claim the Residential Energy Efficient Property Credit. For property placed in service after 2009 there’s no limit on the credit amount. The tax credit can be used to offset both regular income taxes and alternative minimum taxes (AMT). If the federal tax credit exceeds tax liability, the excess amount may be carried forward into future years. Spending on geothermal
heat pump property adds to your home’s cost basis but also must be reduced by the amount of the tax credit received.

VRF Air Source Heat Pumps Set to Capitalize on Geothermal’s Loss

Heat Pump Slaes Volume By Country By 2020

Heat Pump Sales Volume By Country By 2020

As we have written previously, the Federal Renewable Energy Tax Credit for geothermal HVAC systems has sunset (as of 12/31/16). The 30% Federal Tax Credit for residential and 10% for commercial systems is now part of history, unless a Republican Congress and Executive branch happens to see the green light, which is obviously doubtful. In essence, this makes geothermal HVAC installations no longer economically viable for short term life cycle costs versus fossil fuels. Consumers have short memories and tend to be cost driven rather than conscience driven. It is therefor a likelihood that the US geothermal market will take a nosedive in the first quarter of 2017. The question is, what form of HVAC will benefit from this geothermal market downturn? Locally, The New York/Long Island Metropolitan market is still primarily oil based and there are many suburban areas with no access to natural gas. So what is the next best alternative for someone who no longer wants a buried oil tank acting as an environmental Sword of Damocles?

Variable Refrigerant heat pumps and ductless heat pumps are poised as the next best alternative to geothermal to replace fossil fuel heating systems. Although they do not qualify for federal incentives, they do qualify for rebate programs available from NYSERDA, Con-Edison and PSEG. They have been proven to provide consistent heating down to sub-zero temperatures. They have also proven to be one of the most maintenance free of all available alternatives. Consumers want a reliable, low cost heating and air conditioning system. Although the initial installation cost of these systems is higher than a standard cooling only system, the gap is closing between VRF and combined forced-air heating and cooling systems.
The only thing that could derail market penetration of VRF at this point is if a new government decided to significantly increase tariffs on imported HVAC equipment. The vast majority of VRF products are still manufactured in foreign markets (primarily Asia), including those that are name-branded by most American manufacturers. Although there are several VRF plants in the US, most of them are assembly lines for primary components that are manufactured elsewhere. It is only the finished product that rolls off the line here. So, until new trade agreements are put in place or new tariffs added, it is a good bet that VRF heat pump market share will continue to grow, especially in the wake of the fall-off of ground source heat pump demand.

As always, to keep up to date with what’s new in HVAC technology and energy, visit our website at and follow us on Twitter @airideal , LinkedIn and at our Facebook page!

The Death of Federal Geothermal Tax Credits?

Oil Stocks Soar After Donald Trump Victory, But Coal Is The Real Winner

Oil Stocks Soar After Donald Trump Victory, But Coal Is The Real Winner

“There has been a big push to develop alternative forms of energy–so-called green energy–from renewable sources. That’s a big mistake. To begin with, the whole push for renewable energy is being driven by the wrong motivation, the mistaken belief that global climate change is being caused by carbon emissions. If you don’t buy that–and I don’t–then what we have is really just an expensive way of making the tree-huggers feel good about themselves.”  Crippled America – Donald Trump

Of course, it is only conjecture that a lame duck 2016 Congress and a 2017 Republican Congress and President will not renew the Federal Tax Credit on geothermal heat pumps  that was established in 2009 and sunsets on December 31st, 2016. However, if I was a betting man, I’d say that the geothermal HVAC manufacturer’s will be seeing sales dip significantly starting now. Without the 30% Federal Incentive, it will be very hard to convince residential consumers that geothermal will make sense based purely upon economics. We can tout the environmental benefits all that we want, but most consumers are driven by their pocketbooks first and their conscience second.

“Among all the gifts that God gave to America was an abundant supply of natural energy. According to the Department of Energy, the natural gas reserves we have in the ground could supply our energy needs for centuries.” Crippled America – Donald Trump

The Donald believes in energy independence by drilling for oil and natural gas everywhere and anywhere first and then figuring out the rest later. In a now famous Tweet, Trump said that the concept of climate change was created by the Chinese to suppress the U.S. economy, so clearly his administration does not believe that geothermal heating and cooling is an essential component to becoming energy independent while reducing carbon gases. Why then would he push for the renewal of Federal Tax incentives?

Unfortunately, the people have spoken with their vote and they have resoundingly responded that correcting climate change should not be a priority over increased economic growth and a conservative world order.  This will cost many who have built their businesses upon geothermal HVAC manufacturing and contracting solely in the wake of what they hoped would be an increasingly renewable energy conscious world.

Perhaps the pendulum will swing back after 4 or 8 years, but the market for geothermal HVAC and even higher efficiency conventional HVAC would appear to be in hiatus for the near future.

Please note that these are my personal speculations and that I would be happy to be proven incorrect.

As always, to keep up to date with what’s new in HVAC technology and energy, visit our website at and follow us on Twitter @airideal , LinkedIn and at our Facebook page!


Your Help Needed Now for Renewable Energy and Geothermal Tax Credit Extender

GEO has received information regarding the tax credits in regard to legislation. Please take action regarding this important industry legislation.

NOW is the time to act to help extend the federal tax credits for geothermal heat pumps!
Since Congress extended tax credits for solar technologies by five years last December, GEO has pushed hard for an amendment to correct that oversight for BOTH commercial AND residential geothermal heat pump installations.

That amendment for equal treatment with solar is now moving RAPIDLY in the Senate. GEO needs your help NOW to make sure the amendment is approved WITH FEDERAL TAX CREDITS FOR RESIDENTIAL GEOTHERMAL HEAT PUMP INSTALLATIONS UNDER 25D OF THE TAX CODE.

TIME IS SHORT! We have only a short window to make our voices heard, including today (Friday, April 8) and Monday (April 11).


Rep Blackburn and Republicans look to quash Renewable Energy Tax Credits tied to FAA Bill. It is the House versus the Senate over Federal Renewable Tax Credit extensions. If you don’t make your voice heard today or Monday, these credits will disappear and geothermal heat pumps will be set back. Read about it here.


Ecovent – High Tech Disruptor of HVAC Air Distribution

 Just as Nest disrupted the thermostat industry with its Nest Learning Thermostat, there is a new tech start-up attempting to solve home comfort and air distribution balancing issues.   Ecovent stealthily started up around May 2015, but really debuted recently at the 2016 Consumer Electronics show. This time, the disruptor wasn’t developed in Silicon Valley, but in the northeast in Charlestown, Massachusetts. Ecovent markets itself as room-by-room temperature control with automatic adjustable air outlets that open and close based upon feedback received from a plug in room mounted sensor. The Ecovents replace standard supply registers and ceiling diffusers in ceiling, wall or floor models and receive feedback from a smart sensor that doubles as an electrical outlet that plugs into a standard wall receptacle. Multiple sensors communicate with a central “smart hub” that can be integrated with the home WiFi for control.

Ecovent Smart Sensor

Ecovent Wall Outlet







My immediate initial concerns regarding automatic air outlets that shut off a register while a system is running would be increased static pressure and velocity. In cooling mode, closing off registers could lead to less air movement accross the evaporator coil leading to decreased coil temperature and possible freeze ups. However, when researching their site, it is found that the outlets contain pressure, temperature and humidity sensors that prevent issues that could cause noise, temperature, humidity and pressure issues. In rooms with multiple air outlets, a single wall sensor can be set up to control multiple outlets. The entire connected system of multiple outlets and sensors is controlled via a smartphone or tablet app.

Econovent Control App

Ecovent, like Nest, has gone to marketing directly to the consumer instead of via installing contractors. Obviously, they are making similar claims as to the simplicity of installation that any consumer with a screwdriver and correct WiFi key should be able to perform. However, lowering cost and maintaining margin may be the real reason here as the claim is that an average 4 bedroom home will cost about $2000 to outfit, depending upon how many rooms, outlets and sensors are required. I priced out my 4 bedroom home and it was more like $2400. Certainly, this will be for the high end residential market for consumers who either really want to be on the cutting edge of technology and climate control or for those who have some serious system balancing problems that they have been unable to address with volume dampers. It will be interesting to see how Ecovent manages to find growth and who it’s angel capital investors will be. Google gobbled up Nest quickly, perhaps the folks at Ecovent are hoping for a similar outcome. However, this system will really actually be in competition with Nest and WiFi thermostats in general because individual zone control may potentially eliminate the need for smart thermostats with a sophisticated enough Android or iOS app.

As always, to keep up to date with what’s new in HVAC technology and energy, visit our website at and follow us on Twitter @airideal , LinkedIn and at our Facebook page!




New 2016 Efficiency Standards Kick in for HVAC

Don’t buy that 13 SEER replacement unit you were thinking about. The 2015 New York State (and International) Energy Conservation Construction Code has 2016 efficiency standard increases built in. Minimum efficiency standard increases kicked in on 1/1/2016. You can’t replace that rooftop package unit with a bad heat exchanger with a 13 SEER anymore. As of 1/1/2016 it has to be 14 SEER.

You can view all of the minimum efficiency increases for commercial heating and air conditioning equipment here at the International Code Council.  You can find the new residential heating and air conditioning standards here. Most states have now adopted the International Energy Conservation Code.

As always, to keep up to date with what’s new in HVAC technology and energy, visit our website at and follow us on Twitter @airideal , LinkedIn and at our Facebook page!