The Section 179 Deduction is not allowed on an asset that is used for passive rental income.
According to the IRS:
“To qualify for the section 179 deduction, your property must have been acquired for use in your trade or business. Property you acquire only for the production of income, such as investment property, rental property (if renting property is not your trade or business), and property that produces royalties, does not qualify.”
To claim the carryover for a business asset,
Go to the Business Section
- select EDIT for that Business
- Scroll down to "Final Details Carryovers, limitations, summary, at-risk"
- Scroll down to "Special Situations" START or UPDATE
Select "I have unused section 179 expenses carrying over from 2023"
Enter the amount on the following screen
There is a "Learn More" link on the screen to elect the 179 Deduction which explains how the deduction may not be allowed. This can be over-ridden the year the asset was placed into service, but will not allow you to carry the unallowed loss to the following year return if the asset is not business related.
[Edited 3/2/2025 I 11:00am PST]
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