Property Acquired for Business Use
Please understand that in order to qualify for the Section 179 deduction, your property must have been acquired for use in your trade or business. Property purchased only for the production of income, such as investment property, rental property (if renting property is not your trade or business), and property that produces royalties, does not qualify.
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Most equipment will qualify for the Section 179 Deduction but some will not.
Please take a look at the list below for an idea of what will not qualify for this deduction:
- Property used outside the United States generally does not qualify for the Section 179 Deduction.
- Property that is used to furnish lodging is generally not qualified for the Section 179 Deduction.
- Property acquired by gift or inheritance, as well as property purchased from related parties does not qualify for the Section 179 Deduction (No, you can’t sell equipment to yourself and qualify for Section 179).
- Any property that is not considered to be personal property, may not qualify for the Section 179 Deduction.
- Used Equipment (that is new to you) qualifies for Section 179, however used equipment does not qualify for Bonus Depreciation (if offered in a given tax year).
If you are not sure whether or not your property or equipment should be considered Personal Property or Real Property, please consult a professional accountant or tax professional to make sure that you are complying with IRS §179. It is up to you to ensure that any deductions you are taking are within the legal requirements of Section 179.