Section 179 Deduction Expanded

As part of the “Protecting Americans from Tax Hikes Act of 2015” (PATH Act) an expansion of the  Section 179 deduction limit was extended to up to $500,000 from the cost of property used for business purposes more than half the time. Businessses can only purchase up to $2 million of commercial property qualifying for Section 179 in a given year.

To qualify your property must have been acquired for use in your trade or business.  Property acquired only for the production of income, such as investment property, rental property (if renting property is nor part of your trade or business), and property that produces royalties, does not qualify.

When you use property for both business and nonbusiness purposes, you can elect the section 179 deduction only if you use the property more than 50% for business in the year you place it in service.

Property that qualifies for this deduction includes Tangible Personal Property; Off-the Shelf Computer Software; Qualified Real Property; Qualified Leashold Improvement Property; Qualified Restaurant Property; Qualified Retail Improvement Property.

Property that does not qualify includes: Land and improvements; Leased Property; Property used for Lodging; Energy Property; and Excepted Property (certain property leased to others, certain property used predominantly to furnish lodging, air conditioning or heating units, property used predominantly outside the U.S., property used by governmental units or foreign persons or entities).

Find more details about this deduction at the IRS webiste.

Sources:
Section 179
IRS

By Wendy Stewart