Simplified: Equipment Leasing + Section 179
Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and software purchased, financed, or leased during the tax year. Even better, a capital lease combined with Section 179 allows your company to deduct the full amount of the equipment or software acquired, while spreading out the purchase price with a fixed, monthly payment.
The amount you save in taxes can actually be more than the amount you pay out of pocket. True story. When used with a full Section 179 deduction, certain types of equipment leases will enhance your profits since the deductions for equipment and software purchased will exceed your cash outlay in 2016. And, you are getting the equipment you need to grow your company now. Have your cake and eat it, too.
What qualifies for Section 179 Deduction?
+ Equipment purchased for business use
+ Tangible personal property used in business
+ Computers and related equipment
+ “Off-the-shelf” computer software
+ Office furniture and certain fixtures
Advantages of Equipment Leasing
When your company leases equipment and software and then takes the Section 179 Deduction, you can deduct the full amount of the equipment and software without paying the full amount this year. Also, with a capital lease, your company can spread out the purchase cost of the equipment so the budget is unaffected by year-to-year fluctuations arising from investments in equipment and software.
Other advantages of an equipment lease include:
+ Fixed-rate financing
+ Alternative source of funds - diversity
+ No performance covenants
+ No blanket lien filings
Get New Equipment Now
First American can help you analyze your options and assess your potential tax savings, so that you can be confident in your equipment leasing or financing decision. Contact your First American finance specialist to learn more.
Section 179 Quick Facts
+ Deduction Limit $500,000
+ Limit on Capital Purchases $2,000,000
+ Bonus Depreciation 50%
The information presented here has been prepared for informational purposes only. First American does not provide tax, legal or accounting advice.