As we tuck into our holiday plans, the last thing most of us want to think about is how we’re going to file this year’s tax returns, unless Mariah Carey composes a catchy Christmas jingle dedicated to CPAs. But the clock is ticking loudly for property owners and investors to make crucial decisions that could pack a big punch towards their 2022 tax burden. Even with the new year fast-approaching, you still have time to take advantage, or at least, be informed, of any last-minute deductions in order to maximize your benefits.
Know about deductions ending this year
Under the Tax Cuts and Jobs Act (TCJA) of 2017, businesses have until December 31, 2022 to take advantage of the full extent of the bonus depreciation deduction. Bonus depreciation is a tax-saving approach that enables firms, owners, and investors to write off a specific portion of an asset’s cost in the first year it is put to use. The deduction enables owners to deduct a larger portion of an asset’s cost in the year that it begins to be used. However, starting next year, the bonus depreciation will gradually wind down.
2022 is the final year where 100 percent bonus depreciation will be in effect. By 2023, that deduction will be reduced to 80 percent. The bonus depreciation deduction will be knocked down by 20 percent for each year until it completely vanishes in 2027. Real estate players who intend to buy a piece of property that would be eligible for bonus depreciation may
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