The Tax Cuts and Jobs Act (TCJA) made several favorable changes to the federal income tax depreciation rules for real estate. Here's what real estate investors need to know about the TCJA changes, including the potential downsides.
More generous Section 179 deduction rules for real estate
For qualifying assets placed in service in tax years beginning in 2018 and beyond, the TCJA greatly increased the maximum Section 179 deduction to $1 million (up from only $510,000 for 2017), with annual inflation adjustments. The inflation-adjusted number for 2019 is $1.02 million. You can write off your allowable Section 179 deduction in Year One, subject to limitations explained below.
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