Year End Equipment Purchases – To Buy or Not to Buy?

Year End Equipment Purchases – To Buy or Not to Buy?

Year end is quickly approaching and deciding on those year-end purchases is probably already on your mind. As you may know, Section 179 allows small businesses who purchase qualifying
equipment/software in the current calendar year a substantial tax deduction up to $25,000.

The spending cap on equipment for the 2015 Calendar year is $200,000. “This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced on a dollar for dollar basis. This spending cap makes Section 179 a true "small business tax incentive". Source: http://www.section179.org/section_179_deduction.html

The following items generally qualify for the Section 179 Deduction:

  • Equipment (machines, etc) purchased for business use
  • Tangible personal property used in business
  • Computers & "Off-the-Shelf" Software
  • Office Furniture & Equipment
  • Property attached to your building that is not a structural component of the building
    (i.e.: a printing press, large manufacturing tools and equipment)
  • Partial Business Use (equipment that is purchased for business use and personal use:
    generally, your deduction will be based on the percentage of time you use the equipment for business purposes).

Source: http://www.section179.org/property_that_qualifies_for_section_179.html

*Remember that to Qualify for the deduction these items must be purchased and put into use between January 1 and December 31

of the tax year you are claiming.

Calculate Your Deduction

Want to see what your Section 179 Tax Deduction will be? The below calculator link can estimate your equipment deductions for the 2015 Calendar Year

Calculator Link

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Will the Section 179 Deduction Be Increased by Congress?

In the 2014 tax year, Congress reinstated the $500,000 deduction in Mid-December of last year which gave very few business’s time to act on large equipment purchases as most of these items require long lead times. There is still a chance Congress could increase the 2015 deduction but nothing is certain when it comes to the increase. Historical deductions over the past 8 years.

To recap the limits by tax year:

2007 Deduction Limit: $125,000
2008 Deduction Limit: $250,000
2009 Deduction Limit: $250,000
2010 Deduction Limit: $500,000
2011 Deduction Limit: $500,000
2012 Deduction Limit: $500,000
2013 Deduction Limit: $500,000
2014 Deduction Limit: $500,000

Leasing your Equipment and Section 179

What are the advantages of Leasing and Financing your equipment?

The obvious advantage to leasing or financing equipment and/or software and then taking the Section 179 Deduction is the fact that you can deduct the full amount of the equipment and/or software, without paying the full amount this year. The amount you save in taxes can actually exceed the payments, making this a very bottomline friendly deduction (you are reading this correctly; in many cases, the deduction will actually be profit).

Always Consult a Tax Professional

On equipment purchases and leases always consult your Tax Professional to ensure you are properly recording your deductions under the Section 179 Amendment.

In need of a server, computers, and other equipment for your office?

If you currently have aging hardware and want to take advantage of Section 179 before the end of 2015, contact us today to ensure you meet the December 31st deadline and take full advantage of this deduction.

Plan Ahead and Call Us Today!