If you’re American and you purchase trucks or equipment for your U.S.-based business, you might know about a U.S. tax deduction called Section 179. It’s been approved for the 2017 tax year and now eligible to use, but figuring how to take advantage of Section 179 can be dizzyingly complex unless you’re a professional accountant.
Here’s a quick rundown – in plain English – of what exactly a Section 179 deduction is and how you might be able to save thousands by financing or leasing used equipment purchased at IronPlanet or a Ritchie Bros.’ auction.
What is a 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. Come tax time, that can make a huge difference.
Unlike other tools in your accountant’s belt – such as Bonus Depreciation which only benefits new equipment – Section 179 deductions can be used for both new and used equipment. That’s what makes this deduction a perfect match to picking up used trucks and equipment at IronPlanet.
Am I eligible for a Section 179 deduction?
Like any kind of deduction, there are a handful of rules that apply, and you should consult with your accounting and tax advisors to confirm how they apply to your specific situation*. In general, Section 179 states that the equipment must:
- Be within the specified dollar limits of Section 179. For 2017, the deduction limit is US$500,000 if you purchase $2 million or less of trucks or equipment. If you purchase more, the deduction limit goes down.
- Be placed into service in the same year the deduction is being taken. For 2017, you must purchase the equipment AND start using it for your business by December 31, 2017.
- Purchased and used for business. Simply put, it’s got to be used for your business. That motorcycle you just purchased probably won’t qualify, but a dozer bought at auction most likely will.
Here’s the best part: Financing combined with Section 179 can save you thousands this year.
When it comes to financing and leasing, this is where Section 179 gets 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.
That’s a direct, positive impact on your business’s profitability for 2017.
Before making your final purchases of 2017, talk to Ritchie Bros. Financial Services.
Currently, Ritchie Bros. Financial Services is offering our customers the option to make no payments for 120 days**. Combine that with a Section 179 deduction, and you’re looking at NO payments and a FULL deduction in 2017 if you purchase now.
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.
* Neither Ritchie Bros. Financial Services or Ritchie Bros. Auctioneers are tax advisors. To learn specifically how your business may benefit from a Section 179 deduction, please consult with your accountant or tax advisor.
** No payments for 120 days is a limited time offer from Ritchie Bros. Financial Services. Financing is subject to credit approval and qualified equipment or assets. Minimum contract term of 24 months and qualifying assets valued at $10,000 or higher. Offer is available for deals booked and funded by December 31, 2017, and for items purchased by US and Canadian businesses or sole proprietors at Ritchie Bros. auctions occurring from September 1, 2017 to December 31, 2017 only. First payment will be reflective of date of invoice and at the sole discretion of Ritchie Bros. Financial Services. Additional terms and conditions apply. Contact Ritchie Bros. Financial Services for more information.
