The Section 179 Tax Deduction

Advantage of leasing and financing

The obvious advantage to leasing or financing is that you can take a section 179 deduction and save taxes in the year equipment is put into service. Your deduction can exceed the total loan or lease payments paid during the year.

Type of equipment allowed when taking section 179 deduction?

• capital equipment (machinery, equipment, etc.) purchased for business use
• tangible personal property used in business
• business vehicles with gross weight in excess of 5,000 pounds
• computers
• office equipment
• office furniture
• property attached to your building that is not a structural component of building

The equipment listed above does not need to be new to qualify.  Used equipment qualifies for the deduction too!

What is section 179 — equipment loans or leases?

Section 179 of the IRS tax code allows a business to deduct, in the current year, the full purchase price of financed or leased equipment. The maximum allowed is no greater than $ 500,000, and the equipment must be put into service prior to Dec. 31.

Can I lease or finance equipment and take the section 179 deduction?

Absolutely, in fact this is a very effective strategy, as the deduction you take may actually exceed the total loan or lease payments you make for the year.

When do you take the deduction?

You elect to take the deduction when you file your business return for the year, whether you are filing on time or received an extension.