Depreciation Details: How the New Tax Law Changes Things

In the past, your business could depreciate the value of assets over a particular period of time. This was used to help your company determine how much of a loss those assets were taking over their lifespan. Much like a used car, your business assets depreciate in value over time and use. But the new tax laws have created changes in depreciation.

Here's a quick look at what to consider when planning your company's new tax strategy.

It used to be that your company's bookkeeper or accountant would look up how long an asset would need to be reduced in value on depreciation tables that had been standardized by the IRS.

However, the new tax law has changed that approach.

Here are some of the top factors to keep in mind when dealing with assets in your new tax strategy:

  • Is real estate or rental property part of your portfolio? There have been changes in the length of time allowed for depreciation of both the property and the improvements made on it, including periods of 20, 30 and 40 years compared to the previous 15 and 39 years.

  • With regards to real estate, there may be a 15-year period included in the new law, but an omission in the new tax law has this part up in the air until it's tested in the court system.

  • How does 100% depreciation of your new assets sound? Instead of having to wait years to capitalize on your investment's tax benefits, you can depreciate all of it now. Much like the former bonus depreciation allowed in the past, but it will be phased back to standard depreciation from 2023 to 2027.

By taking the time to learn about how the tax laws have changed and forming a new tax strategy for your business, you can reap the benefits of these changes in depreciation. If you're not quite sure exactly how these tax laws will apply to your business, you're not alone. At AccountRely, we've been helping our customers find the right solutions for their depreciation and tax law needs for years. Please feel free to contact our experienced accounting professionals today to develop a new tax strategy for your company.

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