Additional first-year depreciation allows for extra depreciation allowances in the acquisition year of specific business properties, as mandated by federal income tax laws. This incentivizes the acquisition of certain types of business property. It is periodically updated by Congress, with varying limits, rates, and qualifying property.
Bonus depreciation refers to an additional deduction that allows businesses to depreciate a larger portion of the cost of qualifying property in the first year it is placed in service. This is in addition to Section 179 expensing and the standard first-year depreciation.
Cost segregation is a tax strategy that helps businesses and property investors accelerate depreciation deductions. By identifying personal property assets and separating them from real estate, businesses can apply shorter depreciation periods to these assets, thereby realizing greater tax depreciation deductions in the early years.
Depreciable real estate refers to property used in a trade or business or for investment purposes that is subject to depreciation deductions under Section 167 of the Internal Revenue Code. This typically includes both residential and commercial properties, excluding the value of the land.
