December 31 is quickly approaching, and for many businesses 2018 has been a profitable year. One thing businesses are always looking for is a legal way to shield their hard-earned profits from taxation; Section 179 tax deductions can help you do just that! This section of the tax code was written to help small businesses that choose to invest in themselves through the purchase of qualifying property or equipment. In 2018, your business can deduct up to $1,000,000 AND have a first-year bonus depreciation of $150,000!
If you’re a farm or business owner, you’re probably aware of the 2017 Tax Cuts and Jobs Act – the biggest tax overhaul since the Tax Reform Act of 1986. Essentially, 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 qualifying equipment in 2018, you can deduct the FULL PURCHASE PRICE from your gross business income. It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves.
This has made a big difference for many companies! In years past, when your business bought qualifying equipment, it typically had to be written off a little at a time through depreciation. While that’s certainly better than no write-off at all, most business owners would really prefer to write off the entire equipment purchase price for the year they buy it. Section 179 helps businesses by allowing them to purchase needed equipment right now, instead of waiting. For most small businesses, the cost of qualifying equipment can be written off on their 2018 tax return (up to $1,000,000)!
There are limits to which kinds of property qualify, though. According to the IRS, to count for the current Section 179 deduction the property must be eligible, purchased primarily for business use, and be placed into service in 2018. As a rule, Section 179 applies to certain tangible property and equipment, but doesn’t include real property like buildings and their structural components.
However, if you are a farm or agricultural business owner, there is a category of commercial steel buildings that actually qualify for the Section 179 deduction! IRS Publication 225 explains on pages 39-40 that while most structures don’t qualify, single-purpose agricultural (livestock) or horticultural structures DO qualify for the Section 179 deduction!
To qualify, it need only be used for 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 be either a greenhouse or facility that is designed, constructed, and used for commercial production of either plants or mushrooms.
As long as the structure is used for one of these listed dedicated purposes, it qualifies! But you need to act now – these special Section 179 tax deductions apply to the 2018 tax year, and there is no guarantee that these deductions will be extended into future tax years. To qualify for the current Section 179 deduction, your structure must be bought, installed, and placed into service during the 2018 calendar year.
Carport Central can help you custom-design, construct, and install a facility tailored to your specific single-purpose livestock or horticultural needs:
At Carport Central, our friendly and knowledgeable building specialists are standing by and are ready to help you get started with a metal building to meet your specific needs. Give us a call at (980) 321-9898 today, and let us help you take advantage of this significant Section 179 business tax break before time runs out!
NOTE: This blog is intended for informational purposes only, and should not be considered as official tax advice. We advise you to consult with your accountant or attorney with specific tax questions or for specific business tax counsel.