A change in the bonus depreciation rule for 2018 means that you are better off buying something new in 2017 if it costs more than $2,500.
For such items purchased in 2017 you can use a 50% bonus depreciation rule and claim half of the depreciation in 2017. If you wait until 2018 to buy the same item, the bonus depreciation drops to 40%.
For example, if you bought a $4,000 swing set, used 30% in your business, you would depreciate $1,200 over seven years ($4,000 x 30%). After applying the 50% bonus depreciation rule you would deduct $600 in 2017 ($1,200 x 50%) and depreciate the other $600 over seven years.
If you waited until 2018 to buy it, you would deduct $480 in 2018 ($1,200 x 40%) and depreciate the remaining $720 over seven years.
I’m not suggesting you buy something in 2017 just to get the deduction. It’s always better financially not to spend money, even if you can deduct what you buy. But, if you are planning to buy something costing more than $2,500 in the near future, it’s better to buy it in 2017 rather than in 2018.
Here’s an article explaining the bonus depreciation rule in more detail: “Bonus Depreciation Rule Explained.”
Tom Copeland – www.tomcopelandblog.com