additional first-year depreciation

Additional First-Year Depreciation

A provision in U.S. tax law that permits some assets purchased in a given year to be expensed, rather than depreciated, the first year of ownership. That is, one may write off the total value of the asset rather than the amount by which is depreciates. This reduces one's taxable income. There are limits on the value of property on which one may use additional first-year depreciation; this amount changes in different years.
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additional first-year depreciation

Also called bonus depreciation. An IRS provision that allows taxpayers to take more than the ordinary depreciation in the first year a property is placed in use. (After the 9/11 attacks, taxpayers could deduct up to one-half of the basis of their property in the first year.Ordinarily,only 1/39 or 1/28 of the basis could be deducted in the first year.Similarly,in the wake of the devastating 2005 hurricane year, some taxpayers could take additional first-year depreciation equal to one-half of the basis.) In addition, taxpayers may take larger than normal depreciation for some property,called Section 179 property,even it if results in effectively expensing the entire purchase price in the current year.(For more information, visit the IRS Web site www.irs.gov.)

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
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