Improvements made to nonresidential real property: roofs, heating, ventilation, and air-conditioning property, fire protection, and alarm and security systems.Certain depreciable tangible personal property used primarily to furnish lodging (or in connection with furnishing lodging).The definition of Section 179 property changes with tax reform to now include: Section 179 Changes to Property Eligible for the Deduction While the $25,000 sport utility vehicle limitation will remain at $25,000, this amount will be indexed for inflation after 2018. Both amounts will be indexed for inflation for tax years beginning after 2018. With tax reform, the Section 179 deduction allows taxpayers to write off certain tangible property costs for the tax year up to $1 million and increases the phase-out threshold to $2.5 million. Section 179 Deduction Changes With Tax Reform The deduction was further limited to taxable income from the taxpayer’s active trades or businesses but allowed the taxpayer to carry forward the excess indefinitely. A phase-out on the expense election reduced the available amount dollar-for-dollar for property over $2 million, also adjusted for inflation ($2.03 million for 2017). The maximum deduction was $500,000, adjusted for inflation (the 2017 deduction was $510,000). Taxpayers could make the election, with some exceptions, for most tangible personal property, off-the-shelf computer software, and certain leasehold, restaurant and retail real property, if taxpayers used the property in an active trade or business. Under the old tax law, taxpayers (except for trusts, estates and certain others) could “write off” the cost of certain property placed in service during that tax year.

Due to tax reform changes under section 179, taxpayers will start following new equipment deduction rules. Tangible property is generally depreciated based on an assigned depreciation method, recovery period, and convention. Generally, taxpayers must capitalize the cost of property they use in a trade or business, or property they hold for the production of income, and recover the cost over time through annual deductions for depreciation. Editor’s Note: This article was originally published on April 4, 2018.

Section 179 expense