Equipment Leasing Tax Benefits
Does Your Company Qualify For Equipment Leasing Tax Benefits?
To remain savvy and smart in business today, you have to have some kind of strategy in place for success. Most business owners have adopted the saner policy of leasing the equipment they need to operate their businesses rather than paying exorbitant interest rates for financing or laying out more cash than they can afford to when starting out. Smart move and definitely a cash flow bonus. But, did you know that there are equipment leasing tax benefits available under the current tax codes, and that many business owners ignore their potential, year after year? Read on and we will explain how you can take advantage of these benefits, starting right now,
Want to know more about equipment leasing tax benefits and what they can do to help your company succeed? All of us at Sun South Leasing want the best for you and your business, so why not call us today for some expert advice on the right leasing options for you?
Types of Equipment Leases
The most common lease in use today is the operating lease. Under an operating lease, a business owner leases the equipment he needs now, for a negotiated period of time. At the end of the lease, the owner can either purchase the equipment at its market value, or turn it back over to the leasing agency. This is the type of lease usually agreed upon by business owners looking to upgrade their equipment, and are trying it out before purchasing it.
The type of lease that has the most equipment leasing tax benefits is the capital lease, or financing lease. This type of lease is taken out by business owners who do not have the capital to purchase the equipment outright, and cannot afford the sometimes exorbitant interest rates other lenders would give them, especially if they are a new business. At the end of the lease, the equipment stays with the business owner as a permanent purchase. During the term of the lease, it goes on the books as a capital expense, and therefore eligible for tax deductions under code S179.
The Advantages of S179
Under the code known as S179, business owners are allowed to deduct the full purchase price of any equipment purchased during the fiscal year from their gross income. This means that even if you are in the first few months of a capital lease, the market value listed for the equipment on that lease can be considered an eligible deduction from your gross income for that year. The only qualifications are that the equipment in question was purchased by December 31st of that fiscal year.
What kind of equipment can be deducted under these equipment leasing tax benefits? Pretty much anything that can be considered to be business-related equipment, from computers and software, to production machinery, even vehicles can be considered for a tax deduction. Your accountant can advise you if your leases qualify, or you can ask your leasing agent for a copy of the schedule covering S179.