Qualifying Your Property for the Section 179 Tax Deduction

An Alternative to Depreciation on Qualifying Property

By Kevin Hagen, published Jan 17, 2006
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The Section 179 deduction is a special U.S. income tax benefit, available to individuals, partnerships and corporations, that allows you to recover all the cost of certain qualifying property that you purchase for business use in the year you place the property in service. The Section 179 deduction is taken instead of recovering the cost of the property through depreciation deductions. You can claim the entire allowable deduction even if the property was only in service for part of the year. 

What Property Qualifies for the Section 179 Deduction?

 
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Takeaways
  • To qualify for the Section 179 deduction, the property must be used more than 50% for business.
  • There is a maximum overall dollar limit, and a limit of $25,000 for SUVs.
  • If business use drops below 50%, you have to recapture part of the deduction as ordinary income.
Did You Know?
The limit on the Section 179 deduction for SUVs was part of the American Jobs Creation Act of 2004.
Resources
  • Bankrate.com – News and Advice – Taxes – “Small businesses benefit from Section 179 deduction”: www.bankrate.com Internal Revenue Service Publication 946 – How To Depreciate Property: www.irs.gov Self Employed Web – “Watch for a Hidden Pitfall in the Section 179 Deduction”: www.selfemployedweb.com
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