Leasing and financing equipment assists in preserving cash flow—and thanks to updates in the Section 179 accounting rules, it can also save money on taxes.
If the equipment you lease qualifies for the Section 179 tax deduction, you might be able to expense all or portions of the cost.
Here’s what you need to know to create your own tax break for 2017:
1. The deduction limit for Section 179 is $500,000. This means that if you buy (or finance) a piece of equipment, you can deduct the Full Purchase Price (up to $500,000) from your gross income.
2. The 2017 Section 179 deduction threshold for total amount of equipment that can be purchased is $2,000,000. This means that you can purchase more equipment and still have the benefit of the Section 179 deduction.
3. 50% bonus depreciation was reinstated for the tax year 2016 and extended through 2019. For equipment purchases over the Section 179 deduction limit of $500,000, you can deduct an additional 50% of the amount over $500,000 in addition to your normal depreciation deduction. This applies to equipment acquired and put into service during 2017. Bonus depreciation will phase down to 40% in 2018 and 30% in 2019.
December is almost here. Let’s talk before the holidays, and make sure you are able to take full advantage of this tax benefit.