Tax breaks and depreciation - Posted by Arif TX

Posted by JHyre in Ohio on April 23, 2002 at 07:10:44:


Good answers all, I certainly appreciate the help! Allow me to differ on what constitutes a trade or business, as opposed to mere investment activity…I think that the threshhold of required activity is quite low (e.g.- active or material involvement). For you laymen out there, this is important for getting 179 deduction, ordinary losses (on 1231 property) and other issues.

Steve, please keep on posting…perspectives & opinions other than mine on these gray issues are quite valuable.

John Hyre

Tax breaks and depreciation - Posted by Arif TX

Posted by Arif TX on April 22, 2002 at 18:23:19:

If I purchase a SFH can I depreciate all of the appliances seperate from the house and use a depreciating schedule other than the 27.5 years for property? I found this excerpt on and wondered if it applies to the RE business.
“A valuable tax break creating an exception to the long-term write-off rules is found in IRC § 179. A small business can write off in one year most types of its capital expenditures, up to a grand total of $24,000 (in 2001). All profitable small businesses should take full advantage of this provision every year.”

Re: Tax breaks and depreciation - Posted by Steve Avis, CPA

Posted by Steve Avis, CPA on April 23, 2002 at 03:28:33:

Yes, the appliances should have their own line item on the depreciation schedule as their depreciable lives are less than the house. Appliances have a depreciable life of 5 years.

Section 179 is an election allowing a taxpayer involved in a “trade or business” to immediately write off up to $24,000 in depreciable property such as appliances (not real estate) in one tax year. However, unless you are considered a dealer in real estate for IRS purposes, you probably cannot use this deduction since it is allowed only for a “trade or business”.