WASHINGTON – March 11, 2011 – Real estate professionals who purchased equipment such as computers, telephones, cell phones, office furniture, cameras and lockboxes in the past year can deduct the cost as a business expense.
Computers, office furniture and other equipment with a useful life longer than one year typically must be depreciated over time. However, Section 179 of the tax code entitles filers to the full deduction in one year for tangible personal long-term property purchased for business. To qualify, the equipment must be purchased from an unrelated party and used more than 50 percent of the time for business.
The annual limit on the deduction is $500,000 for 2010 and 2011, dropping to $25,000 in 2012.
In addition to a limit on the deduction, the provision also restricts the amount you can spend on qualified purchases in one year to get the deduction, though it’s a lot: $2 million for 2010 and 2011. If you spend over that amount, you must shave $1 off the deduction for every $1 above this limit.
The Section 179 deduction cannot exceed net taxable business income for the year, and those who have a net loss cannot take deductions under the provision. Those whose incomes were too low to benefit from Section 179 can deduct 50 percent of the cost of new business property placed in service last year under the bonus depreciation provision.
For information specific to your business, consult a tax advisor.
Source: Inman News (03/11/11) Fishman, Stephen
© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688
Computers, office furniture and other equipment with a useful life longer than one year typically must be depreciated over time. However, Section 179 of the tax code entitles filers to the full deduction in one year for tangible personal long-term property purchased for business. To qualify, the equipment must be purchased from an unrelated party and used more than 50 percent of the time for business.
The annual limit on the deduction is $500,000 for 2010 and 2011, dropping to $25,000 in 2012.
In addition to a limit on the deduction, the provision also restricts the amount you can spend on qualified purchases in one year to get the deduction, though it’s a lot: $2 million for 2010 and 2011. If you spend over that amount, you must shave $1 off the deduction for every $1 above this limit.
The Section 179 deduction cannot exceed net taxable business income for the year, and those who have a net loss cannot take deductions under the provision. Those whose incomes were too low to benefit from Section 179 can deduct 50 percent of the cost of new business property placed in service last year under the bonus depreciation provision.
For information specific to your business, consult a tax advisor.
Source: Inman News (03/11/11) Fishman, Stephen
© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688
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