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Home / Finance / Tax and Accounting / Businesses Should Review Depreciation Deductions Rules
Businesses Should Review Depreciation Deductions Rules

Businesses Should Review Depreciation Deductions Rules

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Jun 13, 2019 By TaxConnections

Businesses should know the tax rules for deducting depreciation on certain property. This deduction can benefit eligible business taxpayers. The Tax Cuts and Jobs Act made changes to the rules around depreciation that will affect many businesses.

First off, businesses should remember they can generally depreciate tangible property, except land. Tangible property includes:

  • Buildings
  • Machinery
  • Vehicles
  • Furniture
  • Equipment

Here are some of the changes to business depreciation under tax reform:

  • Taxpayers can immediately expense more. Businesses may choose to expense the cost of a property and deduct it in the year it is placed in service.
  • The maximum deduction increased from $500,000 to $1 million.
  • The phase-out limit increased from $2 million to $2.5 million.
  • Taxpayers may include improvements made to nonresidential property. The improvements must have been made after the date the property was first placed in service.

These improvements include:

  • Changes to a building’s interior
  • Roofs
  • Heating and air conditioning systems
  • Fire protection systems
  • Alarm and security systems

Improvements that do not qualify:

  • Enlargement of the building
  • Service to elevators or escalators
  • Internal framework of the building

These changes apply to property placed in service in taxable years beginning after December 31, 2017.

IRS Announcement

Filed Under: Tax and Accounting Tagged With: Deductions, Depreciation, IRS, Taxes

Source: TaxConnections

TaxConnections

TaxConnections

TaxConnections Worldwide Directory of Tax Professionals is an authority site of tax advisors from around the world. As the leaders in our market vertical, you can find and interact with tax professionals in corporations, law firms, public accounting firms, tax services firms, government and academia in one click. Through our innovative technology, we maximize the exposure of a tax professional’s expertise and services to the more than one billion people who go online for tax advice each year.

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