Purpose: Estimate Section 179 expensing for real estate related assets, then layer bonus depreciation and a first-year regular depreciation estimate.
Planning note: This tool is educational. Filing results can differ because elections, asset facts, state rules, conventions, and eligibility details may change the final tax treatment.
Calculator Inputs
Example Data Table
| Scenario | Property type | Asset cost | Business use | Taxable income | Planning takeaway |
|---|---|---|---|---|---|
| Office roof retrofit | Nonresidential Roof Improvement | $350,000 | 100% | $650,000 | Strong candidate when annual limit and income are available. |
| Apartment operations vehicle | Heavy SUV | $68,000 | 90% | $210,000 | SUV cap can restrict expensing even with full business use. |
| Lobby security refresh | Security System | $95,000 | 100% | $80,000 | Income limits can push part of the election into carryover. |
Formula Used
Qualified Basis = Asset Cost × (Business Use % ÷ 100)
Phaseout Reduction = max(0, Total Current-Year Section 179 Property − Phaseout Threshold)
Adjusted Annual Limit = max(0, Annual Limit − Phaseout Reduction)
Actual Section 179 Allowed = min(Prior Carryover + Requested Election, Adjusted Annual Limit, Taxable Income)
Remaining Basis After Section 179 = Qualified Basis − Current-Year Section 179 Allowed
Bonus Depreciation = Remaining Basis After Section 179 × Bonus Rate
First-Year Regular Depreciation = ((Remaining Basis After Bonus) ÷ Recovery Period) × Convention Factor
Estimated Tax Savings = Total First-Year Deduction × Marginal Tax Rate
This page uses a planning style first-year regular depreciation estimate, not a filing-grade MACRS engine. That makes scenario testing faster and easier to read.
How to Use This Calculator
- Select the tax year and choose the asset category that best matches the property or improvement.
- Enter the asset cost and the business-use percentage that applies to the property.
- Add any other Section 179 property placed in service during the same year.
- Enter prior carryover and taxable income to test the annual and income limits.
- Choose a bonus rate, recovery period, service month, and convention for depreciation planning.
- Enter a marginal tax rate to estimate tax savings from the total first-year deduction.
- Submit the form and review the result cards, notes, table, and graph above the form.
- Use the CSV or PDF buttons to save the current report for review or client discussion.
Frequently Asked Questions
1) What does this calculator estimate?
It estimates a first-year deduction stack for a real estate related asset: Section 179, bonus depreciation, regular depreciation, carryover, and rough tax savings.
2) Does land qualify for Section 179?
No. Land is not depreciable, so it is generally not Section 179 property. This estimator focuses on qualifying improvements and business assets instead.
3) Can residential rental buildings usually use Section 179?
Usually not for the building itself. Certain separate business assets may qualify, but the structure of a residential rental property is normally outside Section 179 expensing.
4) Why does the annual limit shrink?
The annual deduction cap phases down when total Section 179 property placed in service during the year rises above the threshold. This prevents unlimited expensing at larger purchase volumes.
5) What is a carryover?
A carryover is the portion of a Section 179 election you could not deduct this year because of the annual limit or taxable-income limit. It may be used later.
6) Why is bonus depreciation an input here?
Bonus rules can depend on timing and asset eligibility. This page lets you test a rate on remaining eligible basis for planning without locking the calculation to one assumption.
7) Is the regular depreciation amount exact for tax filing?
No. It is a planning estimate that uses straight-line logic and a convention factor. Filing calculations may require detailed MACRS tables and more asset-specific rules.
8) Why include a marginal tax rate?
It translates the deduction estimate into an approximate tax savings figure. That helps compare assets, timing choices, and whether a larger election is worth making.