The Section 179 Equipment Deduction Deadline is December 31, 2012
An opportunity to acquire new or upgraded equipment without using up working capital will be dramatically reduced with the close of 2012. This is an opportunity which would be of great benefit to businesses utilizing medical devices, construction machinery as well as many businesses requiring expensive specialty equipment to function.
Known as the Section 179 tax deduction for equipment expenditures, the deduction was scheduled to expire at the end of 2011 and was extended one year by the Tax relief and Small Job Act.
Section 179 of the IRS Tax Code permits a business to deduct, for the current tax year, the full purchase price of financed or leased equipment that qualifies for the deduction.
The equipment purchased, financed or leased must be within the specified dollar limits of Section 179, and the equipment must be placed into service in the same tax year that the deduction is being taken (for tax year 2012, this means the equipment must be put into service between 01/01/2012 and 12/31/2012).
The incredible advantage to leasing or financing equipment and then taking the Section 179 Deduction is a business can deduct the full amount of the equipment purchased or leased without paying the full amount this year. The amount potentially saved in taxes can actually exceed the payments, making this a bottom-line advantageous deduction.
The Section 179 deduction limit is $139,000 on qualifying equipment that is purchased or leased and placed into service from January 1, 2012 through December 31, 2012, and the bonus depreciation has been set at 50%.
Please consult with your tax professional to determine the full tax implications of leasing equipment. Additional information on business taxes and Section 179 can be found on the irs.gov website.
An additional resource can be found at: http://www.section179.org
Renting Your Vacation Home
Income that you receive for the rental of your vacation home must generally be reported on your federal income tax return. However, if you rent the property for only a short time each year, you may not be required to report the rental income.
The IRS offers these tips on reporting rental income from a vacation home such as a house, apartment, condominium, mobile home or boat:
•Rental Income and Expenses: Rental income, as well as certain rental expenses that can be deducted, are normally reported on Schedule E, Supplemental Income and Loss.
•Limitation on Vacation Home Rentals. When you use a vacation home as your residence and also rent it to others, you must divide the expenses between rental use and personal use, and you may not deduct the rental portion of the expenses in excess of the rental income.
You are considered to use the property as a residence if your personal use is more than 14 days, or more than 10% of the total days it is rented to others if that figure is greater. For example, if you live in your vacation home for 17 days and rent it 160 days during the year, the property is considered used as a residence and your deductible rental expenses would be limited to the amount of rental income.
Limited Rental Use
•Special Rule for Limited Rental Use If you use a vacation home as a residence and rent it for fewer than 15 days per year, you do not have to report any of the rental income. Schedule A, Itemized Deductions, may be used to report regularly deductible personal expenses, such as qualified mortgage interest, property taxes, and casualty losses.
IRS Publication 527, Residential Rental Property (Including Rental of Vacation Homes), is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676). The booklet offers more information about rental property, including special rules about personal use and how to report rental income and expenses.