IRS Section 179 NEWS ALERT: SECTION 179 IS $500,000 FOR 2016 The "Protecting Americans from Tax Hikes Act of 2015" (PATH Act) was passed by both the House and Senate and signed into law on 12/18/2015. This bill expanded the Section 179 deduction limit to $500,000 until further notice. The PATH ACT passed in December of 2015 was also made retroactive for the 2015 tax year, making the Section 179 deduction for 2015 $500,000. In addition, the 50% Bonus Depreciation was reinstated. Common Questions: How Much Can I Save on My Taxes in 2016? It depends on the amount of qualifying equipment and software that you purchase and put into use. See the handy calculator below. What Sort of Equipment Qualifies in 2016? Most tangible business equipment qualifies. When Do I Have to purchase the equipment? Section 179 for 2016 expires midnight, 12/31/2016. If you wish to deduct the full price of your equipment from your 2016 taxes and take advantage of the new higher deduction limits, it must be purchased and put into service by then. Many businesses are finding Section 179 Qualified Financing to be an attractive option in 2016.
Tax Savings Calculator Equipment Cost: Sec 179 Deduction: 50% Bonus Depreciation: Normal First Year Depreciation: Total First Year Deduction: Cash Savings: (Assuming 35% tax rate) Lowered Cost of EquipmentAfter Tax Savings:
Qualified Property All Types of EquipmentSection 179 was designed with businesses in mind. Therefore almost all types of "business equipment" qualfies for the deduction. Purchase DatesMust be purchased and put into use before December 31, 2013 EquipmentPurchased for business use Tangible Personal Propertyused in business Business Vehicleswith a gross vehicle weight above 6,000 lbs Computers Software"Off the Shelf" Software Office Furniture Office Equipment Attached PropertyProperty attached to your building that is not a structural component of the building (i.e.: a printing press, large manufacturing tools and equipment) Partial Business UsePartial Business Use (equipment that is purchased for business use and personal use: generally, your deduction will be based on the percentage of time you use the equipment for business purposes).
Non Qualifying Real PropertyReal Property does not qualify for the Section 179 Deduction. Real Property is typically defined as land, buildings, permanent structures and the components of the permanent structures (including improvements). Other examples of property that would not qualify for the Section 179 Deduction include paved parking areas and fences. HVACAir conditioning and heating equipment is generally not eligible for the Section 179 Deduction. Used Outside the USProperty used outside the United States generally does not qualify for the Section 179 Deduction. Acquired by GiftProperty acquired by gift or inheritance, as well as property purchased from related parties does not qualify for the Section 179 Deduction (No, you can't sell equipment to yourself and qualify for Section 179). Personal PropertyAny property that is not considered to be personal property, may not qualify for the Section 179 Deduction. Used EquipmentUsed Equipment (that is new to you) qualifies for Section 179, however used equipment does not qualify for Bonus Depreciation.