February 25, 2016
The Protecting Americans from Tax Hikes (PATH) Act of 2015 passed last December and includes an important depreciation provision and other investment incentives that can benefit owners in the horse racing and breeding industry.
- Three-year depreciation for young racehorses – this compares to the previous seven-year schedule for racehorses 24 months and under. It has been the NTRA’s top legislative priority since the provision’s first inclusion in the 2008 Farm Bill and a subsequent renewal for 2014 after the Farm Bill expired. This schedule is retroactive to January 1, 2015 and is effective through December 31, 2016.
- 50% bonus depreciation – for qualifying new property that is purchased and placed in service during 2015, 2016 and 2017. Bonus depreciation changes to 40% in 2018 and 30% in 2019. Yearlings, unraced two-year-olds and new farm equipment are examples of property that may be eligible.
- $500,000 expense allowance – is now permanent for qualified new or used property that is purchased and placed in service. Broodmares and racehorses are examples of property that may be eligible. The $500,000 expense allowance is reduced by one dollar for each dollar of eligible property purchaed that exceeds $2 million.