Section 179 of the IRS tax code allows small businesses to deduct the full purchase price of qualifying equipment and software purchased or financed during the tax year. This means that instead of having to write off the cost of these items over several years through depreciation, a business can deduct the entire cost in the year the equipment or software was acquired.
For short-term rental businesses, this can include items such as furniture, appliances, and equipment used in the rental property. For example, if a short-term rental business purchases a hot tub for $10,000 to be used in one of their rental properties, they can deduct the entire $10,000 from their taxable income in the year it was acquired. This can result in significant tax savings for short-term rental businesses. However, it is important to note that not all items used in a short-term rental property will qualify for the Section 179 deduction.
In order to qualify, the item must be used for business purposes and must be placed into service by the end of the tax year. Additionally, it must be considered tangible personal property, which means it must have a physical presence and can be seen, touched, or moved.
For example, a hot tub would be considered tangible personal property and would qualify for the Section 179 deduction as long as it is used for business purposes. However, if a short-term rental business purchases a software program to manage their reservations, it would also qualify for the Section 179 deduction as long as it is used for business purposes.
In summary, Section 179 is a tax code that allows small businesses, including short-term rental businesses, to deduct the full purchase price of qualifying equipment and software in the year they are acquired. It can provide significant tax savings for short-term rental businesses, but it is important to ensure that the items being purchased qualify for the deduction and are used for business purposes.
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Please note that the information provided in this blog post is for informational purposes only and should not be considered as legal or financial advice. The information provided may be subject to change or may not apply to your specific circumstances. We strongly encourage you to seek advice from a qualified professional, such as a tax advisor or financial planner, before making any decisions based on the information provided. BIBS is not responsible for any actions taken or decisions made based on the information provided in this blog post. It is the sole responsibility of the reader to ensure that the information is appropriate for their specific situation and to consult with a professional as needed.