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Level 2
posted Oct 14, 2019 5:07:21 PM

Is it still better to claim 179 depriciation if the AGI is already negative?

I am a little confused as a rental property owner, if I should claim the 179 depreciation or just use the standard depreciation for costs in a remodeling project ig my AGI is anyway turning out to be negative?

 

Which will benefit me more in the long run?

0 1 319
1 Replies
Level 15
Oct 14, 2019 6:24:18 PM

Section 179 expensing has both a dollar limitation and an income limitation. The income limitation is as follows:

 

A taxpayer’s § 179 deduction for any taxable year...is limited to the taxpayer’s taxable income for that taxable year that is derived from the taxpayer’s active conduct of any trade or business during that taxable year.

 

See https://www.irs.gov/pub/irs-drop/rp-19-08.pdf

 

See also https://www.irs.gov/publications/p946#en_US_2018_publink1000299340

 

Further, the Section 179 deduction is not allowed for property used in connection with residential rental property.

 

See https://www.irs.gov/publications/p527#en_US_2018_publink1000219023