Non Qualifying Property
Section 179 Deduction | Non Qualifying Property
While most equipment that small businesses lease, finance or purchase will qualify for the Section 179 Deduction, there are some exceptions.
Although we provide a basic list below, it cannot cover everything. If you have any questions about your property or equipment qualifying, please see the IRS Tax Information for Businesses website or consult your tax preparer regarding your question.
List of Section 179 Non Qualifying Property
As we previously mentioned, most normal business equipment will qualify for the Section 179 Deduction. Some of the property and equipment that does not qualify for the Section 179 Deduction is listed below:
Real Property does not qualify for the Section 179 Deduction. Real Property is typically defined as land, buildings, permanent structures and the components of the permanent structures (including improvements not specifically covered on the qualifying property page). Other examples of property that would not qualify for the Section 179 Deduction include paved parking areas and fences.
Property used outside the United States generally does not qualify for the Section 179 Deduction.
Property that is used to furnish lodging is generally not qualified for the Section 179 Deduction.
Property acquired by gift or inheritance, as well as property purchased from related parties does not qualify for the Section 179 Deduction (in other words, you can’t sell equipment to yourself and qualify for Section 179).
Any property that is not considered to be personal property may not qualify for the Section 179 Deduction.
Complying with Section 179
If you are not sure whether or not your property or equipment should be considered Personal Property or Real Property, please consult your tax preparer to ensure that you are complying with IRS §179. While the Section 179 Deduction offers a tremendous advantage to small businesses across the country, it is up to you to ensure that any deductions you are taking are within the legal requirements of Section 179.