What Property Does Not Qualify for the Section 179 Deduction?
The Section 179 Deduction is a great way for small business owners to invest more into their companies while getting tax breaks on equipment. Similar to all government programs, however, there are certain rules that must be followed. Here is a list of rules for property that cannot be claimed under the section 179 deduction:
- Land and Improvements
This means you cannot claim land purchases or land improvements under the Section 179 Deduction. Land Improvements includes things like swimming pools, fences, pavement, or bridges.
- Excepted Property
- Property used outside of the United States
- Property used by tax exempted organizations unless for producing a taxable income
- Property used by government units
- Heating or air conditioning Units
- Property for leasing
- Unless you are a leasing corporation
- Unless you manufacture property for leasing purposes
- Property used for lodging
- Unless used by a hotel in relative to the business
- Unless it is a historic site
- Unless it is considered “Energy Property” which means it is solar powered or is used to produce or distribute energy
As long as your property doesn’t fall into one of these descriptions, it can be claimed on your tax return under section 179.
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