5-Year Farm Equipment Depreciation Ends in 2009

There’s still time to earn quicker depreciation—as well as a 50% first year deduction—by investing in tools of precision farming if you buy and take possession of the equipment by December 31, 2009.

“Machinery is normally depreciated over 7 years, but a one-year legislative change for 2009 allows for 5 year depreciation,” says Rob Holcomb, University of Minnesota Extension Educator in Ag Business Management. “For 2010 it reverts back to 7 years.

“For example, if a farmer buys a $100,000 tractor, his first-year depreciation using straight line figuring would be $7,142 using 7 years, versus $10,000 on 5 years. Granted, this won’t make a huge impact, but it does help,” Holcomb says.

There’s also a maximum dollar limit deduction you can claim under Section 179. “That amount is $250,000 for 2009, but drops to $134,000 in 2010,” he adds.