Our accounting friends at Insight Accounting Group point out a few changes that took effect back in January to the IRS Section 179 expensing election for 2016. These are worthy of consideration by business owners and managers contemplating asset purchases this year. They include:
- Beginning in 2016, Sec. 179 is indexed for inflation. This year the basic expense limit for asset purchases will be baselined at $500,000, but expect slight increases annually hereafter. And note that the limit is reduced in 2016 dollar-for-dollar for all purchases in excess of $2,010,000.
- The definition of “section 179 property” now permanently includes software and real property such as leasehold improvements (as well as retail and restaurant property). Thus, you can elect to use section 179 purchasing when you purchase these assets.
- You may be able to deduct more of qualified leasehold improvements in 2016. Beginning this year, the law eliminates the $250,000 cap on the amount of section 179 you could claim for this property.
- And just in time… beginning this year, air conditioning and heating units are eligible for section 179 expensing. Breathe easier, folks…
As always, we advise our clients to take advantage of section 179 expensing as a safe and effective way to lower your taxes each year.