Section 179 deductions just got better. For tax year 2018, the Section 179 deduction limit for property has soared to $1 million and, for equipment purchases, the cap is now set at $2.5 million. It could be a big tax-saving opportunity for small businesses—one that could be worth hundreds of thousands of dollars.
The Section 179 deduction allows business owners to deduct the entire depreciation amount of a business property purchase in one tax year as opposed to spreading it out over time (up to 39 years in some cases). We’ve offered tips in the past to help business owners take full advantage of the Section 179 deduction. You can revisit these posts for a refresher:
New provisions for 2018 have expanded some definitions of Section 179 property—which can mean even more savings, especially for rental and commercial property owners. These new definitions include:
- Certain depreciable tangible personal property used predominantly to furnish lodging or in connection with furnishing lodging. Property under this definition includes beds and other furniture, refrigerators, ranges, and other equipment used in the living quarters of a lodging facility such as an apartment house, dormitory, or any other facility (or part of a facility) where sleeping accommodations are provided.
- Qualified real property including improvements to nonresidential real property such as roofs; equipment for heating, ventilation, and air-conditioning; fire protection and alarm systems; and security systems.
Bonus depreciation rules have changed, too, allowing additional tax deductions for certain property which now includes used property (such as previously owned equipment) purchased after September 27, 2017.
With so many new opportunities available, it may be a great time to finally make that business property or equipment purchase you’ve been putting off. Plenty of restrictions apply, though, so it’s important to contact us to help you work through the details first.
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