Tax Law: Depreciation Write Offs To Lower Your Taxable Income

Apr 03, 2019

Offshore asset protection lawyer Are you a small business looking to save money on taxes? Let’s take a look at some depreciation write off options.

Deduct Inventory Investments: A Boon For Retailers

Under the new tax code, inventory rules have changed. Currently, businesses that do less than $25 million in sales a year can write off inventory in the year of purchase. Before, you had to wait till the items sold. Officials hope this will breathe life into the retail sector, as inventory is now a tax-beneficial buy instead of a liability.

Automobile Deduction Options: Officials Want You To Buy Cars

Business owners and professionals that buy work vehicles can now take larger deductions in the year of purchase instead of amortizing the losses over several years. The new standards allow for depreciation deductions of $10,000 in the purchase year, $16,000 in the second year of ownership, $9,600 in the third and $5,760 in the fourth. This doesn’t apply, however, to SUVs and trucks over 6,000 pounds.

The change means it may now make more financial sense for business owners to buy company cars rather than lease them.

Additionally, the standard $8,000 bonus depreciation has been expanded to include new and used vehicles, which can be claimed for business SUVs and trucks over 6,000 pounds.

Increased Deductions for Equipment

Officials expanded Section 179 of the new tax code, which outlines equipment depreciation deductions, to include HVAC units, roofs, commercial security apparatus, and fire alarms. Businesses can deduct the full amounts upon purchase instead of calculating the deprecation value over several years.

Real Estate Depreciation Changes

Under the new rules, taxpayers can apply the real estate bonus depreciation to new and used property, and amounts can be written off wholly in the purchase year. Lawmakers hope that the change will spur more real estate and equipment investment. Moreover, no income limitation applies to this type of depreciation deduction.

Connect with a Tax Attorney To Pay Less

The new tax code includes significant changes that affect businesses. If you haven’t had a proper tax consultation in several years, now is the time to do so. In all likelihood, you should re-configure your tax positioning to better align with the new parameters.

To read more about the new rules, click here. If you’re ready to have a no-risk conversation with a tax law attorney, get in touch today. We look forward to chatting and answering your questions.

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