HVAC - replace now or later?

[Mindy Bowden]

The HVAC on one of my rental properties is nearing the end of its life. It currently still works but I can see it dying this summer or by next summer. I can't decide whether to just go ahead and replace it or if I should wait until it actually breaks down. I'd hate for it to break down in the middle of summer and then have to put the tenants up in a hotel if the HVAC company can't get to us immediately (as it's usually the case down here in the South). Pros and cons to doing it now or later? If I replace it now before it's broken, can I still expense it or would it need to be depreciated?

[Peter S.]

Use the rule of 5000 for AC. 

Multiply the cost of the repair times the age of the unit. If the number is less than 5000, you do the repair. If its more than 5000, you replace the unit.