A question many restaurant owners ask is whether they can take a Section 179 deduction on the restaurant furniture they purchase. And the answer is a positive one.
Yes, restaurant furniture is eligible for a Section 179 deduction. This is excellent news for many in the food service and hospitality industries, as it can make purchasing new furniture for your establishment much more affordable.
For those who do not know, Section 179 is the IRS tax code for accelerated depreciation. Normally, if you buy business equipment (like restaurant furniture), you can depreciate it a little each year. Section 179 permits you to take all the depreciation in the year you buy it and put it into service, allowing for a full-price business tax deduction.
For 2024, the Section 179 Deduction is $1,220,000. This means you can purchase a little over 1.2 million in qualifying equipment and deduct it from your taxes. The cap on equipment spending is $3,050,000 – once a company reaches that amount, the Section 179 deduction is decreased on a dollar-for-dollar basis. This makes Section 179 a true small business tax deduction, as most small businesses will not reach that upper limit in any given year.
Section 179 In Action
This deduction can make a big difference in your bottom line. Let’s assume a $15,000 restaurant furniture purchase:
That’s $5,250 that stays in your bank account instead of going to the IRS. No wonder Section 179 is so popular.
There are a few other rules for Section 179, such as the eligible equipment must be purchased and put into service (installed/etc.) during the calendar year, and your company needs to have taxable income. In other words, Section 179 cannot be used if your company does not show a profit, nor can it be used to create a loss.
Most tangible business equipment - including furniture and fixtures - qualifies for Section 179. It’s really an excellent tax deduction for small and midsize companies.
Please note that this post is to make you aware that restaurant furniture can be eligible for Section 179. But as mentioned, there are some details – always ask your accountant or tax professional before making any tax-related decisions or purchases.
Can I claim Restaurant Furniture as a Section 179 Deduction?
Yes, restaurant furniture is eligible for a Section 179 deduction.
What other types of equipment qualifies?
Staying with restaurant furniture (which is our specialty), things like countertops, millwork, and waste receptacles are also eligible.
Can I claim the deduction on multiple purchases?
Yes. A restaurant can, for example, buy new furniture and waste receptacles (from Soft Touch furniture of course!), new light fixtures, and a new POS computerized register system, and it could all be combined into one Section 179 deduction. This assumes all Section 179 guidelines are followed and your total equipment spend didn’t exceed the limits.
How do I claim the Section 179 deduction for restaurant furniture?
Simple – just use IRS form 4562.
Can You Answer Other Section 179 Questions?
No we cannot. This post is to only make you aware that a) the tax deduction exists, and b) restaurant furniture can be eligible for a Section 179 deduction. This post represents all the information we have on the subject.
The good news is your accountant or tax professional will have all the answers you are looking for. Definitely consult with them.