If you take advantage of the Tax Cuts and Jobs Act of 2017 changes, you may be able to fully expense the full value of equipment assets on your taxes!
Businesses can deduct the full purchase price of qualifying equipment purchased or financed (Installment or $1 buy-out) during the tax year. That means that if you buy (or lease) a piece of qualifying equipment before December 31st, you can deduct the FULL PURCHASE PRICE from your 2018 gross income and if leasing, you pay for the equipment over time.
Who Qualifies for Deductions?
All businesses that purchase, finance, or lease new or used business equipment during the tax year 2018 should qualify for the depreciation tax deductions. There are limitations on the amounts, and you should always consult with a tax advisor before taking advantage of any tax deduction.
For guidelines on what property is covered under the tax code, the IRS lists qualifying equipment but, it is a long list. For 2018, tax depreciation deductions can also include qualified property (building) improvements.
Leasing & Tax Deductions
There is a huge advantage to leasing or financing equipment and then taking the Full Depreciation Tax Deductions. Equipment buyers can deduct the full amount of the equipment without paying the full amount right away. The amount saved in taxes can exceed the annual, monthly payments, making this a very bottom–line friendly deduction. The small business that is managing cash flow can leverage a lease to minimize out–of–pocket cash and still, take the tax deductions.
Make sure you are familiar with the benefits of the IRS tax deductions for accelerated depreciation. An excellent web site to reference is: https://www.section179.org/
We recommend that you discuss with a tax adviser if and how to take advantage of any depreciation deductions on your income taxes.