Tax Benefits on Year-End Equipment Purchases

Wondering how to spend the rest of your 2020 equipment budget? Thanks to Section 179 and Bonus Depreciation tax benefits, now is a great time to purchase equipment your company may need to mitigate future inventory shortages. Over the past few years, the Section 179 tax deduction has been available for companies to utilize throughout the entire year.

If you’re interested in applying these tax benefits to your purchases, our knowledgeable finance experts at Altec Capital are ready to help you and your business find the best options to achieve significant savings. If you would like to take delivery at year-end, any equipment purchased through Altec Capital can be secured with no up-front down payment.

Altec Capital Financing offers:

  • Deferrals up to 90 days
  • Aggressive Financing Rates
  • A variety of lease options

What type of financing option is best for me to receive Section 179 benefits?

Capital Lease 

For accounting purposes, the Capital Lease is treated as if the asset were purchased. This type of lease is similar to an installment purchase and includes a bargain purchase option of $1 at the end of the term. With the same tax treatment as a loan, you can depreciate the equipment while deducting the interest portion of the payment. At the end of the term, there are no sales tax implications since there is no transfer of ownership. This type of lease is commonly referred to as a $1 Buyout Lease.

Advantages:

  • The Tax Benefit of Ownership – including depreciation and interest expense deductions
  • Conserves lines of credit with other lenders
  • Tax advantages

Equipment Finance Agreement (EFA) 

An Equipment Finance Agreement is a loan product that helps increase your overall profitability. An EFA benefits customers who desire immediate equipment ownership yet want to pay for the equipment over an extended period of time.

Advantages:

  • The Tax Benefit of Ownership – including depreciation and interest expense deductions.
  • Provides a variety of payment plans, including monthly, annual, and skip payment plans.
  • Quick equity buildup through repayment.
  • Better cost control and cost containment.

For 2020, bonus depreciation is offered at 100%. This option is only available for a limited time. Bonus depreciation typically takes effect after a business reaches the Section 179 spending cap. It’s also available for both new and used equipment.

Check out the resources and information below to familiarize yourself with Section 179: 

Section 179 Details:

Using a tax lease in the 4th quarter is a great way to take advantage of the best rates of the year from Altec Capital. These favorable depreciation deductions will deliver tax-saving benefits to many businesses in 2020. Please note that all qualifying assets will need to be financed and placed in service by December 31.

Call (888) 408-8148 or email finance@altec.com if you have any questions about Altec Capital lease options or 4th quarter tax benefits.