This month, we peeled back the layers of leveraging Section 179’s tax code — from understanding what it is, how to cash in on it, and when the qualifying timeframe is eligible to use the deduction.
To round out this educational series, we are highlighting how to go about financing and leasing equipment, as well as using the Section 179 calculator in order to estimate your potential savings.
Financing and Leasing Equipment
A lucrative decision to close the books on 2019 would be to utilize Section 179, specifically, with a lease and/or financing a piece of equipment.
Taxes saved through the Section 179 deduction will most likely surpass your cash expenditures for the year. This is possible when combining an appropriately constructed equipment lease or equipment finance agreement, together with a complete Section 179 deduction. The tax code is a tool that amplifies your company’s bottomline, allowing the addition of new equipment, vehicles, as well as software.
The use of qualified financing for business equipment purchases is encouraged by the official tax code’s website, Section179.org. Additionally, there is even a bonus involved! Click this link for details on the bonus.
The Benefits of Leasing and Financing
A crystal clear benefit to leasing / financing equipment or software, together with Section 179’s deduction, is that their full amount can be deducted, but you do not actually have to pay the full amount in 2019. The savings in taxes could surpass the payments; it’s hard to believe, but it’s true. The deduction’s tax savings could enable your company’s bank records to be larger, vs. never financing the equipment to begin with.
Furthermore, did you realize that your business can lease equipment and still leverage Section 179’s deductions? The primary perk of a non-tax capital lease is enjoying the Section 179 deduction, but only needing to make smaller payments. A non-tax capital lease allows you to procure it and utilize the deduction, but not having to actually spend that amount this calendar year…which reduces the out-of-pocket cash needed. In some instances, the amount saved in taxes could be more than the collective total of the first year’s payments.
It is also possible to acquire an equipment loan using a Section 179 EFA (Qualified Equipment Finance Agreement) and still capture the full deduction.
You can structure a Section 179 qualified equipment lease or financing agreement by clicking here. Section179.org suggests working with an underwriter from Crest Capital.
Section 179 Calculator
If you are deciding on possibly purchasing or leasing equipment in the 2019 tax year, the Section 179 Deduction Calculatoris a helpful tool to make that call and see for yourself how it can have a significant impact on your equipment costs.
It is a simple calculator that can help come up with an estimate on your potential tax savings. All you need to do is input the purchase price of the equipment and/or software, and the calculator will tell the rest of the story.
Please note that this Section 179 calculator fully indicates the current deduction limits, as well as takes into account any amendments or bonus depreciation implications.
Example Calculation
Section179.org illustrates an example of using a qualified equipment cost for a sample calculation.
In their example, $75,000 in equipment purchased would cost $48,750, a savings of $26,250. This is a perfect demonstration that boils down what is a stake here — thousands of dollars in your pocket due to procuring equipment that you needed regardless.
Don’t forget, to qualify for Section 179’s deduction, the equipment or software must be purchased, financed or leased, and put into service, no later than December 31, 2019.
For any questions regarding refurbished medical equipment, and taking advantage of these tremendous tax savings, reach out to our team at Auxo Medical.