If you're a U.S.-based business, you might know about a U.S. tax deduction called Section 179. It's been approved for the 2019 tax year – the deduction limit was doubled to $1,000,000 in 2018 and it’s unchanged for 2019! And more good news – it still applies to the purchase of used equipment.
It's good news for both buyers and sellers. If you're thinking of selling, this could be the right time. Buyers looking to capture the increased tax savings Section 179 offers will be motivated to complete their purchases by the end of 2018, meaning a likely increase in demand and strong pricing for used equipment. Here's a deeper look at Section 179.
What is the Section 179 deduction?
Section 179 of the IRS Tax Code lets a business deduct the full purchase price of qualifying equipment within the year it's purchased instead of writing off small amounts over many years. Here are some key points to know about Section 179. Equipment must:
- Be within the specified dollar limits of Section 179.
For 2019 the deduction limit is US$1,000,000 if you purchase $2.5 million or less of trucks or equipment.
- Be placed into service in the same year the deduction is being taken.
For 2019, buyers must purchase the equipment AND start using it for their business by December 31, 2019.
- Purchased and used for business more than 50% of the time. So unless you plan on using your dozer for recreational use, you should be fine!
Section 179 deductions can be used for both new and used equipment. That's what makes this deduction a perfect match for buyers looking to pick up used trucks and equipment at a Ritchie Bros. auction, IronPlanet or Marketplace-E, and sellers looking to capitalize on the presumed increased demand*.
Here's the best part: Combining PurchaseFlex Financing with Section 179 could save you thousands this year.
When it comes to financing and leasing, this is where Section 179 gets really powerful: the amount you save in taxes by deducting the full purchase price may end up being larger than the sum of loan or lease payments you make this year – especially for anything purchased in December.
Right now we’re offering PurchaseFlex Financing with no payments for 120 days* - meaning you’d pay nothing in 2019, but could get the full tax deduction this year.
That’s a direct, positive impact on your business’s profitability for 2019.
Before making your final purchases of 2019, talk to Ritchie Bros. Financial Services.
Talk with Ritchie Bros. Financial Services about your purchasing needs and let them know you’re interested in making a Section 179 deduction this year. You’ll get a fast, no-obligation finance pre-approval and the details needed to review with your tax advisor**.
After that, all that’s left is for you to decide what to do with the money you saved.
*No payments for 120 days is a limited time offer and is subject to credit approval and qualifying assets purchased between September 1, 2019 and December 31, 2019 by US and Canadian businesses or sole proprietors at Ritchie Bros. auctions, IronPlanet auctions, or from Marketplace-E only. Additional terms and conditions apply.
**Ritchie Bros. is not a tax advisor. To learn specifically how your business may benefit from these tax law changes, please consult with your accountant or tax advisor. Nothing contained herein is meant to be, nor should it be considered, a guarantee as to price performance at any Ritchie Bros. unreserved auction.