The 4th quarter of 2013 is staring you in the face. The tax man is waiting in January. Start thinking about what you are buying fast and take advantage of the tax savings available to you.
Most everyone knows about the accelerated depreciation tax savings on new equipment the past few years, but used equipment tax write offs were limited. But since the passage of the American Taxpayer Relief Act of 2012 those limits were increased. The emphasis of this deduction is to get businesses buying equipment and investing in their companies to help jumpstart the economy.
Enryk O’Callaghan of Crest Capital, www.crestcaptial.com, sent me a link to great informative website with a bundle of information on the Section 179 Deduction. According to www.section179.org, which basically simplifies the Section 179 of the IRS Tax Code, limits on Used Equipment have been raised to $500,000, same as new equipment, for the first year. New Equipment does receive an additional 50% of the remaining balance, but each has a maximum of $2,000,000 before being reduced. What does that all mean? Here’s an example:
New or Used Equipment Purchase $750,000
1st year accelerated depreciation write off $500,000
Bonus Depreciation (50% of balance over $500,000 for New Equipment Only) $125,000
Write off for 1st year for New Equipment $625,000
Write off for 1st year for Used Equipment $500,000
While used equipment write off is not as much as new, a typical write off would be $100,000, so this is five times the normal amount. This means, even on a used piece of equipment, you will pay a whopping $144,000 less in corporate taxes, which means that $500,000 machine really only cost you $356,000. A great investment in your business and your Country.
This deduction is not just for portable equipment. Stationary equipment qualifies also, up to an including the installation costs. This can be a major cost savings for companies switching from diesel to electric equipment.
So what equipment qualifies?
· Some Vehicles
· Computers, Office Equipment and Furniture
· Much more
But what about used equipment?
Section 179 considers used equipment too. To qualify, the equipment must:
· Basically meet the same new equipment requirements
· Must be new to the business
When considering used equipment, make sure to meet these qualifications if at all possible. You are also able to carryover these credits, which means if next year you will still have the left over credit from 2013 to apply to 2014. The way this country is running up debt, this credit will soon be eliminated.
One other note, also included in the capital purchase list is software. So for those that are looking into trucking or recycling software, or in need of scale software, take advantage now. Even some Leases qualify. Look to www.section179.org and click on the Qualified Leases tab for more information and save without even purchasing any equipment.
I’m a Grinder Guy, not an accountant, so check with yours for accurate and additional and up to date information. But I can tell you this for sure, the Grinder Guy will be driving a new Truck by the end of December!
For more information or any Section 179 qualified financing, see www.section179.org for yourself or contact Enryk O’Callaghan of Crest Capital, www.crestcaptial.com, 1-800-245-1213 ext 175.