Quick question, I have a single member LLC which purpose is to purchase, and rent out residential real estate. The LLC is setup so that I take all deductions and income/expenses on my personal tax return.
I purchased a home in 2008, put it in service in 2009, can I use Section 179 instead of depreciating over 27.5 years?
I know I should go see my CPA but I had to stop using him as he did several mistakes on my return last year, I am still looking for a good CPA in Dallas, TX btw if any of you have any recommendations.
Tangible personal property is eligible for Sectoin 179 treatment. The IRS defines tangible personal property as any tangible property that is not real property and includes
Machinery and equipment.
Property contained in or attached to a building (other than structural components), such as refrigerators, grocery store counters, office equipment, printing presses, testing equipment, and signs.
Gasoline storage tanks and pumps at retail service stations.
Livestock, including horses, cattle, hogs, sheep, goats, and mink and other furbearing animals.
To qualify for the section 179 deduction, your property must have been acquired for use in your trade or business. Property you acquire only for the production of income, such as investment property, rental property, and property that produces royalties, does not qualify.
I would argue that an appliance (personal property) installed in your rental property is done so solely for the production of passive income rather than for use in an active income trade or business, and is excluded from Section 179 treatment.
On the other hand, the office equipment that you purchase for use in your property managment company, which manages rental property for a fee, is tangible personal property used in a trade or business and does qualify for Section 179 treatment.
For me, the grey area is the personal computer that you purchase for both personal and business use in your home office where you manage your own rental properties. I probably would agree that the PC might qualify for Section 179 treatment for the amount of the purchase price allocated to business use. I would not push the envelope that far, but I would have no argument if you chose to do so.