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USA Tax Glossary
Section 179 lets eligible taxpayers elect to deduct the cost of certain qualifying property in the year it is placed in service, subject to dollar, phaseout, business-use, and taxable-income limits.
Investor Context
Real estate investors should be careful with Section 179 because not all rental or real estate property qualifies. IRS guidance distinguishes qualifying property, qualified real property, business use, and property that does not qualify.
Why It Matters
It can accelerate deductions for certain qualifying property.
For tax years beginning in 2025, IRS Publication 946 lists a $2,500,000 maximum Section 179 deduction; IRS guidance for 2026 lists $2,560,000.
Section 179 is subject to business income and other limitations.
Records To Prepare
Placed-in-service dates and invoices
Business-use percentage support
Property classification and qualified real property analysis
Taxable income and carryover records
Common Caution
Do not assume residential rental building costs qualify for Section 179. Eligibility depends on the type of property and how it is used.
Direct Answers
Certain qualified real property may qualify, but land, buildings, structural components, and rental property facts require careful review.
No. They are different cost recovery rules with different elections, limits, and eligibility requirements.
Official IRS Reference
IRS: Publication 946, Section 179 deductionRelated Terms
Bonus depreciation is an additional first-year depreciation deduction for eligible property.
Form 4562 is used to claim depreciation and amortization, make Section 179 elections, and provide listed property information when required.
Depreciation is the annual deduction that lets a taxpayer recover the cost or other basis of business or income-producing property over a number of years.
