If you’re planning to buy equipment or other business assets this year, you need to be aware of the changes in how much of the cost you can deduct in 2012.
Here are the new limits.
* Bonus depreciation. The enhanced deduction — up to 100% of qualified assets — expired at the end of 2011. The maximum bonus depreciation allowance for most qualified property placed in service in 2012 is 50% of the cost of the property.
Bonus depreciation is generally available for new assets that have a useful life of 20 years or less.
* Section 179. The expanded $500,000 Section 179 write-off that has been available for the past two years ended December 31, 2011. For 2012, you can elect to expense up to $139,000 of qualified assets you purchase during the year.
To receive the full benefit of the Section 179 deduction, the total cost of all qualifying assets purchased in 2012 must be $560,000 or less. Your deduction may also be limited by the amount of your business income.
Both new and used assets qualify for Section 179.
Congress may change these rules at any time. If you’re thinking of purchasing assets for your business this year, please give us a call for the latest depreciation developments.