The Small Business Jobs Act (the Act) of 2010 provides for significantly faster cost recovery of business property purchases (machinery, equipment, and certain software). Under the new law for tax years beginning in 2010 and 2011 the $250,000 expensing limit is increased to $500,000 and the purchase amount of property placed in service is increased from $800,000 to $2,000,000.
The Act also provides that up to $250,000 of the $500,000 can include $250,000 of certain qualified real property. Expensing real property, that’s a new concept.
The Act also extends the 50 percent bonus first-year depreciation for qualifying property placed in service in 2010 (2011 for aircraft and long-term production-period property).
These changes are huge, but it takes demand to increase production and an increased labor force to run the production. With interest rates so low, will this be the catalyst to get small businesses to start buying, producing, and hiring? If you’re in need of equipment, machinery, software and qualified real property then this may be the “time to buy.” We can help you do a cost benefit analysis to see if these changes are worthwhile for your business to consider.