Can You Deduct More Than Your First Year of Lease Payments?
Maybe! Congress was looking out for all the good boys and girls when they made Section 179 deductions permanent in 2015. This gives small businesses the opportunity to immediately depreciate their entire equipment purchase value up to $500,000.
“It is easily the most positive thing Congress has done for small business in the past several years, and it will ripple through the economy in the form of higher growth and more jobs,” said Dan Danner, president and CEO of the NFIB.
In addition, this is the last year of the 50% bonus deduction before it starts phasing down in 2018. Businesses of all sizes will be able to depreciate an additional 50% of the remaining equipment price, above the $500,000 Section 179 depreciation limit. (The bonus depreciation will phase down to 40% in 2018 and 30% in 2019.) For example, if you are ready to make a big investment in your business that totaled $650,000 you would be able to apply the entire $500,000 Section 179 deduction, plus another $75,000 (half of the $150,000 remaining amount above $500,000) plus the normal first-year depreciation of $15,000 for a total first-year deduction of $590,000, bringing your cash savings to a whopping $206,500 (at an assumed 35% tax bracket) and a final lowered cost of equipment to $443,000.
You can use this calculator to estimate your own investment savings.
This is a good time to invest in your business! If you have made or would like to make a purchase with us in 2017, we want to be sure you are able to take advantage of this deduction. The equipment has to be put into service in your facility by December 31st if you want to take advantage of the deductions this year! You should also know Section 179 applies to new and used equipment (the bonus deduction is on new equipment only), so we can assist you through Global Imaging or Global Garage. Financing equipment with Global Imaging Finance may be the smartest way to take advantage of Section 179 because the first year of payments may be less than the total deduction.
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If you are looking to increase speed and capacity, beat the competition, or move into new markets, be sure to start working with us now to take advantage of Section 179.
As always, we appreciate your business and want to make sure you get the most out of your investments with us.