Bonus Depreciation Extended; Section 179 Expanded in Fiscal Cliff Deal

Jan 2

Thanks to passage of the American Taxpayer Relief Act of 2012, commercial solar purchasers now have greater opportunity to mitigate their tax burden, due to the extension of 50% bonus depreciation allowances, and new Section 179 expensing limits.

Bonus depreciation, which allows solar owners to depreciate an additional 50% off the depreciable basis of a system in the first year (rather than over a five-year MACRS schedule), was originally slated to expire December 31, 2012. Bonus depreciation may now apply for systems placed in service before January 1, 2014. Unlike Section 179 expensing, net income is not needed to utilize bonus depreciation.

Section 179 expensing, which provides for immediate expensing of qualifying assets, was slated to drop precipitously in 2013, down to a maximum write-off of $25,000. However, the fiscal cliff legislation increases this limit to $500,000 for both 2012 and 2013. Similarly, the asset value which can be placed in service before a reduction in the limitation is triggered is increased to $2,000,000.

For more information about how these or other federal and state tax policies and incentives can help make solar a money-saving venture from day one, please contact REC Solar today.


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