The following is a general tax depreciation guide for assets placed in service in 2016. Expensing of property under Section 179 is available up to $500,000 is available in 2016. Bonus depreciation of 50% is available in 2016.
| Property Type | Tax Recovery Period in Years | MACRS(M)[1] or Straight Line(SL) | Bonus | Section 179 |
| Computer Software | 3 | SL | Yes | Yes |
| New Computers | 5 | M | Yes | Yes |
| New Equipment | Generally 5 or 7 | M | Yes | Yes |
| Used Equipment | Generally 5 or 7 | M | No | Yes |
| New Furniture | 7 | M | Yes | Yes |
| Used Furniture | 7 | M | No | Yes |
| Residential Real Estate | 27.5 | SL | No | No |
| Land | Not depreciable | N/A | No | No |
| Land Improvements | 15 | M | Yes | No |
| Commercial Real Estate | 39 | SL | No | No |
| Qualified Retail Improvements[2] | 15 | SL | Yes | Yes[3] |
| Qualified Lease Improvement (QLHI)2 | 15 | SL | Yes | Yes3 |
| Qualified Improvement Property(QIP)2 | 39 | SL | Yes | Yes |
| Goodwill / Blue Sky | 15 | SL | No | No |
Listed property rules apply to automobiles. The rules cap the amount of depreciation one is eligible to take. These are outlined as follows (potentially subject to adjustment by the IRS in 2016):
| Detail | PassengerVehicles – Cars | Passenger Vehicles – Trucks & Vans | VehiclesOver 6,000 lbs. | Exceptioned Vehicles Over 6000 lbs.[4] |
| 2015 Depreciation Deduction Limit (1st year) | $3,160 | $3,460 | Not limited | Not limited |
| Bonus Depreciation Limit | $8,000 | $8,000 | Not limited | Not Limited |
| Section 179 Limit | Not eligible | Not eligible | $25,000 | Not limited |
| Maximum 1st Year Deduction | $11,160 | $11,460 | Certain restrictions | Not limited |
These tables are of general nature and are not intended to address specific circumstances of any individual or business. Tax professionals should be advised to address an individual’s or business’ specific situation. Downey & Company has made every attempt to ensure the accuracy and reliability of the information provided in this article. However, Downey & Company does not accept responsibility or liability for the accuracy, content, completeness, legality, or reliability of the information provided.
[1]MACRS tax method is generally double declining method.
[2] This asset class is further defined in the table below.
[3] In 2015, the Section 179 was capped at $250,000. This cap has been lifted for 2016.
[4] Certain specific vehicles over 6,000 lbs. have no limits. These include nine passenger vans, vehicles with a cargo area of six feet in length not readily accessible from the passenger compartment (i.e. box truck), and vehicles without seating rear of the driver (i.e. cargo van).
Summarized Definition of Qualified Improvements:
| Jan 1, 2016 and Subsequent | Qualified Leasehold Improvement Property (QLHI) | Qualified Retail Improvement Property (QRIP) | Qualified Improvement Property (QIP) |
| Depreciable Life | 15 SL | 15 SL | 39 SL |
| Bonus Eligible | Yes | Yes | Yes |
| Section 179 Eligible | Yes | Yes | Yes |
| Building Age | Improvements placed in service more than three years after the building is first placed in service. | Improvements placed in service more than three years after the building is first placed in service. | N/A |
| Related Party Rules | Tenant cannot be related party with the landlord. | N/A | N/A |
| Requirements | Improvements made pursuant to a lease, and to the interior portion of a commercial building. | Interior improvements to retail space. Space should be open to the general public and used in a retail trade or business selling tangible personal property. | Improvement to the interior of a commercial building. Improvement is made after the building is first placed in service. |
| Exclusions | – Enlargements of the building;- Elevators and escalators;- Internal structural components;
– Structural components benefitting common space; |
– Enlargements of the building;- Elevators and escalators;- Internal structural components;
– Structural components benefitting common space; |
– Enlargements of the building;- Elevators and escalators;- Internal structural components;
|
If you have any questions regarding this table, please contact Jamie Downey at JMDowney@DowneyCoCPA.com or at 800.849.6022.
