Last year we told you about some special tax savings that were being offered to businesses by the federal government through Section 179 deductions for 2018, and we’re happy to report that those same provisions are in effect for the 2019 tax year, too! This section of the tax code was written to help small businesses save on their taxes by choosing to invest in themselves through the purchase of qualifying property or equipment. What does this mean for you in 2019? Essentially, your business can deduct up to $1,020,000 of the purchase amount, and also take a bonus first-year depreciation of up to $153,000!
In other words, thanks to the Tax Cuts and Jobs Act, Section 179 allows businesses to deduct the full purchase price of qualifying equipment or property acquired during the current tax year. This means that if you buy a qualifying item by December 31, 2019, you can deduct the FULL PURCHASE PRICE from your gross business income, plus you can take off a bonus first-year depreciation amount on top of the purchase price.
Typically speaking, purchases that are categorized as capital expenses can only be written off a little at a time through annual depreciation. While that’s better than no write-off, most business owners would really appreciate being able to deduct the ENTIRE equipment purchase in the same year they make the purchase. Section 179 allows you to do just that on a qualifying purchase! This is a HUGE tax break for small businesses, unlike anything we’ve seen in a generation.
Of course, we should also point out that there are limits to which kinds of purchases qualify for this special business tax deduction. To count towards the Section 179 deduction, the item must be eligible, intended primarily for business use, and acquired by purchase in 2019. As a rule, Section 179 applies to certain tangible property and equipment, but doesn’t include real property like buildings and their structural components.
While buildings and structures are typically considered a capital expense that wouldn’t qualify for this special business tax break, there are types of commercial steel buildings designed for farm and agricultural business use that DO qualify! The 2019 Farmer’s Tax Guide (IRS Publication 225) explains on page 38 that eligible single-purpose agricultural (livestock) or horticultural structures meet the requirements for a Section 179 deduction!
So, what are the eligibility requirements exactly? To qualify, a new agricultural structure must serve either designated livestock or horticultural purposes. A qualifying single-purpose livestock structure must be designed, constructed, and used to house, raise, and feed a particular type of livestock or poultry. A qualifying single-purpose horticultural structure can either be a commercial facility for plant production, or a commercial facility for mushroom production.
As long as your new structure is used for one of these dedicated purposes, it qualifies! But you need to act now. These special Section 179 tax deductions only apply to the 2019 tax year, and there is no guarantee that these deductions will be in effect for 2020. To qualify for the current Section 179 deduction, your structure must be purchased and placed into service by December 31.
Carport Central can help you custom-design, construct, and install a steel facility that’s perfect to house these Section 179-qualifying single-purpose livestock or horticultural functions:
Our friendly and knowledgeable building specialists are standing by and are ready to help you get started with a custom steel building to meet your specific needs. We can help you take advantage of this significant Section 179 business tax break before time runs out! We can also help you with any other residential, commercial, or farm metal structure needs that you may have. Just give us a call at (980) 321-9898 today, and let’s get started!
Remember, at Carport Central we’re about Providing Shelter For Your Way Of Life.
NOTE: This blog is intended for informational purposes only, and should not be considered as official tax advice. We encourage you to consult your accountant or attorney with questions about your business taxes, or for specific business tax counsel.