Depreciation is a great way to reduce your taxable income. With 100% bonus and section 179 you can eliminate most or all your taxable income. Below is a recap of the depreciation rules and limits for 2019.
For property acquired after September 27, 2017, and placed in service during 2019, a taxpayer may deduct 100% of the cost of qualified property in 2019. Bonus depreciation applies to new as well as used property. Qualified property is property with a life of 20 years or less.
Section 179 limits for 2019 are $1,020,000 of equipment costs with a phase out for purchases in excess of $2,550,000. Section 179 applies not only to equipment but certain real property that normally has a depreciable life of 39 years. Air conditioning and heating units placed in service since 2016 are eligible and continue to be eligible for this deduction. Certain improvements to nonresidential real property (roofs, fire protection, alarm systems, and security systems) are available for section 179. Qualified improvement property which is an improvement to an interior portion of a commercial building qualifies for section 179. However, qualified improvement property does not include building enlargements, elevators, and escalators, and the internal structural framework of a building.
It has never been a better time to consider having a cost segregation study done on a new or existing building, improvements or expansion. Cost segregation study can carve out items that are eligible for accelerated depreciation from the 39-year life and allow a greater deduction.
Vehicles that are under 6,000 pounds are limited to $10,100 deduction without bonus and $18,100 with bonus for the first year. If the vehicle is over 6,000 there is no limit on the deduction for vans and trucks. SUV’s that fall between 6,000 and 14,000 pounds are limited to $25,000 section 179 expensing.
There is still time to purchase and place the property in service before year end so you can take advantage of these deductions.