Anyone purchase new property in 2019 taking advantage of sec 179
Most Popular Reply
Ashish AcharyaBusiness Member
CPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votesOriginally posted by @Susan O.:
https://www.kbkg.com/news/kbkg-tax-insight-tax-reform-changes-to-qualified-improvement-property
Anyone who purchase a new building this year not they should do this
Anyone do it in 2018?
MORE:
Starting in 2018, there is a $1 million limit on the total amount of business property expenses you can deduct each year using Section 179. This dollar limit applies to all your businesses together, not to each business you own and run. You do not have to claim the full amount. It’s up to you to decide how much of the cost of property you want to deduct. But you don’t lose out on the remainder; you can depreciate any cost you do not deduct under Section 179.
If you purchase more than one item of Section 179 property during the year, you can divide the deduction among all the items in any way, as long as the total deduction is not more than the Section 179 limit. It’s usually best to apply Section 179 to property that has the longest useful life and therefore the longest depreciation period. This reduces the total time you have to wait to get your deductions.
You cannot take section 179 on a actual the real property.
Yes, we have seen people take this all the time.
Most people opt for bonus depreciation rather than section 179 as sec 179 is more restrictive for most people.
But you also have to consider your state tax implication. What I have seen is most states follow bonus depreciation but not Section 179. So if you take section 179 there will be no addback to your income when you calculate your state taxes. However if you take bonus depreciation, You would have to add back the depreciation you took because the state will not allow that deduction.
For a small taxpayer, right now on bonus and section 179 gives us similar benefit. That is 100% expense of the qualified property. Under both rules you cannot expense the entire real property.
INVESTOR FRIENDLY CPA®4.9242 Reviews
8 Replies
- Accountant · Atlanta, GA · Member since 2015 · 1k+ posts · 1k+ votes7y
What exactly are you trying to S179?
- 7yAshish AcharyaBusiness MemberCPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
Originally posted by @Susan O.:
https://www.kbkg.com/news/kbkg-tax-insight-tax-reform-changes-to-qualified-improvement-property
Anyone who purchase a new building this year not they should do this
Anyone do it in 2018?
MORE:
Starting in 2018, there is a $1 million limit on the total amount of business property expenses you can deduct each year using Section 179. This dollar limit applies to all your businesses together, not to each business you own and run. You do not have to claim the full amount. It’s up to you to decide how much of the cost of property you want to deduct. But you don’t lose out on the remainder; you can depreciate any cost you do not deduct under Section 179.
If you purchase more than one item of Section 179 property during the year, you can divide the deduction among all the items in any way, as long as the total deduction is not more than the Section 179 limit. It’s usually best to apply Section 179 to property that has the longest useful life and therefore the longest depreciation period. This reduces the total time you have to wait to get your deductions.
You cannot take section 179 on a actual the real property.
Yes, we have seen people take this all the time.
Most people opt for bonus depreciation rather than section 179 as sec 179 is more restrictive for most people.
But you also have to consider your state tax implication. What I have seen is most states follow bonus depreciation but not Section 179. So if you take section 179 there will be no addback to your income when you calculate your state taxes. However if you take bonus depreciation, You would have to add back the depreciation you took because the state will not allow that deduction.
For a small taxpayer, right now on bonus and section 179 gives us similar benefit. That is 100% expense of the qualified property. Under both rules you cannot expense the entire real property.
INVESTOR FRIENDLY CPA®4.9242 Reviews Oh maybe I need to do the bonus depreciation instead? I'm just trying to write off as much possible for first year I did a 1031 exchange from a triplex with all equity and only a little depreciation left. Then bought a 22 unit with it. Fixer We've already spent $100,000 on improvements and repairs
Originally posted by @Ashish Acharya:
Originally posted by @Susan O.:
https://www.kbkg.com/news/kbkg-tax-insight-tax-reform-changes-to-qualified-improvement-property
Anyone who purchase a new building this year not they should do this
Ashish so
Anyone do it in 2018?
MORE:
Starting in 2018, there is a $1 million limit on the total amount of business property expenses you can deduct each year using Section 179. This dollar limit applies to all your businesses together, not to each business you own and run. You do not have to claim the full amount. It’s up to you to decide how much of the cost of property you want to deduct. But you don’t lose out on the remainder; you can depreciate any cost you do not deduct under Section 179.
If you purchase more than one item of Section 179 property during the year, you can divide the deduction among all the items in any way, as long as the total deduction is not more than the Section 179 limit. It’s usually best to apply Section 179 to property that has the longest useful life and therefore the longest depreciation period. This reduces the total time you have to wait to get your deductions.
You cannot take section 179 on a actual the real property.
Yes, we have seen people take this all the time.
Most people opt for bonus depreciation rather than section 179 as sec 179 is more restrictive for most people.
But you also have to consider your state tax implication. What I have seen is most states follow bonus depreciation but not Section 179. So if you take section 179 there will be no addback to your income when you calculate your state taxes. However if you take bonus depreciation, You would have to add back the depreciation you took because the state will not allow that deduction.
For a small taxpayer, right now on bonus and section 179 gives us similar benefit. That is 100% expense of the qualified property. Under both rules you cannot expense the entire real property.
Ashish so are these "Cost Segregation" specialist not legit? The ones that split up cost seg and allow you to depreciate the building faster?
- 6yAshish AcharyaBusiness MemberCPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
Originally posted by @Susan O.:
Originally posted by @Ashish Acharya:
Originally posted by @Susan O.:
https://www.kbkg.com/news/kbkg-tax-insight-tax-reform-changes-to-qualified-improvement-property
Anyone who purchase a new building this year not they should do this
Ashish so
Anyone do it in 2018?
MORE:
Starting in 2018, there is a $1 million limit on the total amount of business property expenses you can deduct each year using Section 179. This dollar limit applies to all your businesses together, not to each business you own and run. You do not have to claim the full amount. It’s up to you to decide how much of the cost of property you want to deduct. But you don’t lose out on the remainder; you can depreciate any cost you do not deduct under Section 179.
If you purchase more than one item of Section 179 property during the year, you can divide the deduction among all the items in any way, as long as the total deduction is not more than the Section 179 limit. It’s usually best to apply Section 179 to property that has the longest useful life and therefore the longest depreciation period. This reduces the total time you have to wait to get your deductions.
You cannot take section 179 on a actual the real property.
Yes, we have seen people take this all the time.
Most people opt for bonus depreciation rather than section 179 as sec 179 is more restrictive for most people.
But you also have to consider your state tax implication. What I have seen is most states follow bonus depreciation but not Section 179. So if you take section 179 there will be no addback to your income when you calculate your state taxes. However if you take bonus depreciation, You would have to add back the depreciation you took because the state will not allow that deduction.
For a small taxpayer, right now on bonus and section 179 gives us similar benefit. That is 100% expense of the qualified property. Under both rules you cannot expense the entire real property.
Ashish so are these "Cost Segregation" specialist not legit? The ones that split up cost seg and allow you to depreciate the building faster?
Yes, you can do cost seg and take bonus deprecation/ sec 179 on some asset. You cant take a bonus or sec 179 on the actual building. Once segregated, you can take accelerated depreciation on the driveway, parking lot. appliances, cabinets and such.
INVESTOR FRIENDLY CPA®4.9242 Reviews - 6yMichael PlaksPro MemberTax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
It's difficult to help you when you're not disclosing your whole situation. On another thread 2 days ago, you asked whether you could combine a homestead exemption with a 1031 exchange, and myself and @Dave Foster, among other professionals, tried to answer.
Here you just claimed that you already completed a 1031 exchange of this triplex? Was it really an exchange, meaning you had a "qualified exchange intermediary" involved? If yes, they should have answered a lot of these questions. If not, and you simply sold your triplex and then used that money to buy your new property - then you do not have a valid exchange at all.
If you do have an exchange, you can only depreciate what was left on the old property. You can also depreciate, including possibly bonus and 179, the new improvements, and cost segregation may not be necessary if you kept a good itemized accounting of the work done.
Also, your expression of "all equity and little depreciation left" does not make a lot of sense.
In short, it sounds like you may be trying to DIY some complicated transactions without sufficient understanding of taxation, likely hurting yourself in the process. With a 22-unit costing in 7 digits, it's not wise to avoid professional help.
- 6yMichael PlaksPro MemberTax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
Originally posted by @Ashish Acharya:
A very good point to take into consideration state taxation. Your state, CA, for example, does not recognize bonus depreciation.
Originally posted by @Michael Plaks:
It's difficult to help you when you're not disclosing your whole situation. On another thread 2 days ago, you asked whether you could combine a homestead exemption with a 1031 exchange, and myself and @Dave Foster, among other professionals, tried to answer.
Here you just claimed that you already completed a 1031 exchange of this triplex? Was it really an exchange, meaning you had a "qualified exchange intermediary" involved? If yes, they should have answered a lot of these questions. If not, and you simply sold your triplex and then used that money to buy your new property - then you do not have a valid exchange at all.
If you do have an exchange, you can only depreciate what was left on the old property. You can also depreciate, including possibly bonus and 179, the new improvements, and cost segregation may not be necessary if you kept a good itemized accounting of the work done.
Also, your expression of "all equity and little depreciation left" does not make a lot of sense.
In short, it sounds like you may be trying to DIY some complicated transactions without sufficient understanding of taxation, likely hurting yourself in the process. With a 22-unit costing in 7 digits, it's not wise to avoid professional help.
This is a different deal. This isn't the triplex.
I already exchanged this last year 2019 and purchased the upleg as i stated
Join the conversationCreate a free account to reply, vote on answers and follow this thread.