Articles & Publications

Congress Recently Extended IRC §179 to Include Deductions for Real Property but only for 2010 and 2011

Posted December 2, 2010 by Barbara I. Berschler in Articles & Publications, Real Estate Publications

Usually when you think of §179 of the Internal Revenue Code, you think of deductions available to businesses for depreciable, tangible "personal" property such as equipment, vehicles and computers. However, Congress has given a gift in the Small Business Jobs Act, signed September 27, 2010, by extending the deductions to include up to $250,000 of Qualified Real Property.

What kind of real property will qualify for this favorable tax treatment?

  • First: Qualified Leasehold Improvements-typically capital improvements made to an interior portion of a commercial non-residential building.
  • Second: Qualified Retail Property Improvements-typically capital improvements to buildings which are open to the general public for the sale of tangible personal property.
  • Third: Qualified Restaurant Property-typically, capital expenditures for the improvement, purchase or construction of any building (new or used), if more than 50% of the building's square footage is devoted to the preparation of, and seating for, the on-premises consumption of prepared meals.

In order to receive the benefit of this deduction for Qualified Real Property, you must place the building or capital improvement in service by the end of your 2011 tax year, so it may take some quick footwork to be able to elect §179 treatment.

Whether you can take advantage of this deduction depends on your individual circumstances and (big disclaimer coming here) you cannot consider the foregoing to be tax advice of any sort. As with anything connected with the Internal Revenue Code, there are tricky issues, so you should consult with your tax planner to guide you as to how best to take advantage of this opportunity. That said, this link will take you to a good first step in understanding the process.