FOR BREAKING NEWS VISIT WWW.QNS.COM FEBRUARY 15, 2018 • THE QUEENS COURIER 21
Business Changes to Depreciation
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41-18 CRESCENT ST
LONG ISLAND CITY, NY 11101
718-707-0295
47-46 VERNON BLVD
SECOND FLOOR
LONG ISLAND CITY, NY 11101
718-707-0295
Hernan Barona, E.A
hernan@savignano-cpa.com
www.savignano-cpa.com
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BY JOHN SAVIGNANO, CPA
The new tax law has lots of business
breaks. 100% depreciation is back, temporarily.
Firms can write off the entire
cost of qualifying assets that they buy
and place in service after September
27, 2017. It generally lasts until 2022
and then phases out 20% for each
year thereafter. Assets bought before
September 28, but put into use later, are
subject to the old rules.
The break applies to new and used
assets with lives of 20 years or less. The
cost of qualified film, television or live
theatrical productions is eligible, too.
There’s a higher cap on expensing
business assets. The maximum amount
a taxpayer can expense for new or
used business assets instead of depreciating
them is $1 million. This limitation
phases out dollar for dollar
once more than $2,500,000 of assets ae
placed in service during the year. These
higher expensing limits apply to tax
years beginning after 2017 and will be
indexed annually for inflation.
Property eligible for expensing has
been expanded a bit under the new law.
Included now are depreciable personal
assets used predominantly to furnish
lodging such as beds, refrigerators,
and stoves for use in hotels, apartments
and dormitories. Certain improvements
made to commercial buildings
are also now eligible for expensing:
Roofs, HVAC equipment, fire protection
and alarms and security systems.
Buyers of business vehicles get lots
of juicy tax breaks under the new law.
The annual depreciation caps for passenger
automobiles are going up. For
vehicles placed in service after 2017
and for which 100% bonus depreciation
is not claimed, the first-year ceiling
is $10,000. The second and third
year caps are $16,000 and $9,600.
After that…$5,760. The figures will be
inflation-adjusted. If bonus depreciation
is claimed, the ceiling increases to
$18,000 for the first year.
Buyers of heavy SUVs used for business
can write off up to 100% of the
cost, thanks to bonus depreciation.
SUVs must have a gross weight rating
over 6,000 pounds to qualify. It doesn’t
matter if the SUV is new or used. And
you can also expense up to 100% of the
cost of heavy pickup trucks if the cargo
bed is at least six feet long.
Separate rules for restaurant, retail
and leasehold improvements are gone.
They’ve been consolidated under the
grouping of qualified improvement
property which is an improvement to
the interior of a commercial building
made after the date that the building
was placed in service. It doesn’t include
escalators or elevators or improvements
to the building’s internal structural
framework or expansions. Qualified
improvement property is eligible for
expensing, but it’s unclear whether it’s
eligible for bonus depreciation.
New farm equipment can be depreciated
over five years instead of seven
years. This doesn’t cover grain bins,
cotton ginning assets, fences or land
improvements.
The law keeps the current depreciable
recovery periods for real estate…27.5
years for residential rental property and
39 years for commercial realty.
John Savignano is a partner with
Savignano Accountants & Advisors
located at 47-46 Vernon Blvd., Second
Floor, in Long Island City. If you have
any questions or require additional
information, please call John at 718-
707-0955.
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