Applicable to purchases of equipment and machinery used within a business or trade, Section 179 depreciation deductions also apply to qualified real property. A benefit of these deductions is that they provide for immediate tax write-offs, rather than depreciation deductions taken over time.
The Tax Cuts and Jobs Act (TCJA) expanded Section 179 through a bonus depreciation tax break, which allows the entire cost of eligible assets that are placed in service in the current year to be written off that same year.
The TCJA also increased Section 179 annual deduction limits from $500,000 to $1.02 million and expanded qualifying assets to encompass depreciable tangible personal property, provided that it is used in furnishing lodgings.
With TCJA, the qualified real property definition has also been expanded in ways that include specific improvements to nonresidential real property. This includes roofs, HVAC systems, and security and fire alarm systems. Because of the complexities of Section 179 deductions, it makes sense to consult with an established tax planning firm to determine optimal ways of writing off qualifying assets.
