What is the $5000 rule for HVAC?

What is the $5000 rule for HVAC? The $5000 rule for HVAC is a simple decision rule to help homeowners decide whether to repair or replace heating and cooling system based on age and repair cost. Formula: multiply age of equipment in years by cost of repair in dollars, if result exceeds $5000, replacement is more economical than repair, if less than $5000, repair makes sense. For example, 10 year old furnace needing $600 repair: 10 x 600 = 6000, over $5000, so replacement recommended. 4 year old AC needing $600 repair: 4 x 600 = 2400, under $5000, repair recommended. This rule accounts for remaining life expectancy, increasing failure likelihood with age, efficiency gains of new equipment, and availability of rebates. Some contractors now use $6000 or $7000 threshold due to inflation and higher equipment costs since 2022. It is not code requirement but practical economic guideline. Other factors include energy efficiency, refrigerant type R22 vs R410A vs R454B, warranty status, comfort issues, and federal tax credits up to $2000 for heat pumps. So $5000 rule is quick tool to avoid investing heavily in old inefficient unit likely to need more repairs soon.