What is Section 179?
The Section 179 Tax Deduction is a special federal IRS law that allows businesses to deduct all or part of the purchase price of certain qualifying business equipment. Section 179 was designed with businesses in mind which is why almost all types of business equipment that your company buys or finances qualifies for the section 179 deduction.
Why do you need to know this? This is a great opportunity to upgrade that old software and computer hardware!
Section 179 can save you a lot of money, but it can also be confusing. Section 179 provides some very valuable tax advantages for most types of equipment and software placed into service this year. If you want to take advantage of this, you should get started now because it is set to expire when the ball drops on December 31st! Drop us a note and we’ll help you get started.
We’ve also put together a free buyers guide to help navigate the IT purchasing labyrinth. You can download it here: Hardware Purchasing Guide
So let’s talk about the details:
What qualifies?
- Equipment (machines, etc.) purchased for business use
- Tangible personal property used in business
- Business vehicles with a gross vehicle weight in excess of 6,000 lbs
- Computers
- Computer “off the shelf” Software
- Office Furniture
- Office Equipment
- Property attached to your building that is not a structural component of the building (e.g.: a printing press, large manufacturing tools, and equipment)
- Partial business use (i.e., equipment that is purchased for business and personal use)
What is non-qualifying?
Real property (i.e., land, buildings, permanent structures, components of permanent structures, paved parking areas, and fences)- Air conditioning
- Heating equipment
- Property used outside the United States
- Property used to furnish lodging
- Property acquired by gift or inheritance
- Property purchased from related parties
- Any property not considered to be personal property
- Used equipment (that is new to you) qualifies for Section 179, but NOT for Bonus Depreciation
- Sheep (just making sure you’re still reading.)
What is the bonus depreciation?
- For 2017, you can depreciate 50% additional on new equipment only.
- In 2018, you can depreciate 100% additional on new equipment only.
- In 2019, you can depreciate 100% additional on new equipment only.
- In 2020, you can depreciate 30% additional on new equipment only. (This may change in the January 2020 announcements)
What is the deduction limit?
$1,000,000
What is the deadline for ordering?
The Section specifies that all orders must be paid and received by December 31, 2017 at midnight. So you need to have your orders in no later than December 15th to ensure delivery.
Have questions?
Call us at 541-779-4777, or email Chris @ chrisd@tekmanagement.com for general questions and to get started with a quote. If you have technical tax-related questions, please talk to your tax professional. Additional information can be found by Googling Section 179, or helpful sites like: Section179.org