Get a Heavy-Duty Truck or Construction Equipment Using Section 179
In a world of frequently depressing financial news, the federal government has provided a holiday gift that goes straight to the heart of your business – your bottom line. With new Section 179 changes, you can invest in your business and enjoy substantial and immediate tax relief at the same time.
But the clock is ticking on time to take advantage of this golden opportunity.
What is Section 179?
Section 179 isn’t new. It was initially part of stimulus legislation passed in 2008 in the hope that tempting incentives would encourage businesses to make large capital investments in vehicles, equipment and software, including things like heavy-duty trucks and construction equipment.
The Tax Relief Act of 2010 and Jobs Act of 2010 sweetened the pot by extending and broadening Section 179 benefits with significantly higher-than-ever purchasing and deduction limits.
These changes are aimed primarily at small and medium businesses, but even the largest companies can benefit. However, changes are for the 2011 tax year only, and there is no way of knowing what might change next year or beyond, so it’s imperative to capture these savings before December 31.
Essentially, you can write off the entire purchase price of qualified equipment or software you acquire in 2011. Specifically:
- The equipment purchase total was raised to $2 million. This covers most new or used capital equipment and some types of software.
- The deduction limit was raised to $500,000.
- The Bonus Depreciation was increased to 100% of qualified assets, but only on new equipment.
- Whatever you purchase must be put into use by the end of the year.
Section 179 deductions are generally applied first, then the Bonus Deduction. However if you post a tax loss for 2011, you can carry over the Bonus Deduction to a future profitable year when you’re able to use it.
Use this simple calculator to check out your deductions.
You don’t have to purchase outright to reap the benefits.
New Section 179 incentives apply whether you buy, lease or finance your new equipment. So you can use qualified financing to capture the benefits while maintaining a more comfortable cash flow.
In fact, your tax savings could actually be greater than your payments, netting you a profit, because you can deduct the entire purchase price (up to the limit) without having to pay that full amount this year.
What equipment qualifies?
Section 179 changes cover vehicles over 6000 pounds GVW. Naturally that includes heavy-duty trucks, construction equipment, and so on, benefiting any company that relies on trucks or other heavy equipment to get the job done.
That means now is the prime time to upgrade, expand or replace aging-out equipment so you can start the new year ready to go. Finally, a chance to catch up and get a jump on the future.
Section 179 changes can make a tremendous impact on your business, putting cash in your pocket as well as positioning you for top performance moving forward. But you have to take action now. If you and your tax advisors haven’t already evaluated these year-end financial opportunities, get the straight-forward details right away.
Using every tax advantage available is always a smart business decision. And in this case, you can end the year with the best kind of “bang” – a big boost for your bottom line. You’ll be wishing yourself Happy Holidays and Happy New Year, too.