Did you know that your company can lease equipment and still take full advantage of the Section 179 deduction? In fact, leasing equipment and/or software with the Section 179 deduction in mind is a preferred financial strategy for many businesses, as it can significantly help with not only cash flow, but with profits as well.
Non-Tax | Capital Lease
The main benefit of a non-tax capital lease is that you can still take full advantage of the Section 179 Deduction, yet make smaller payments. With a non-tax capital lease you can acquire and write off up to $500,000 worth of equipment this year, without actually spending $500,000 this year. A small business that is managing cash flow can leverage a non-tax capital lease and still take the Section 179 Deduction.
Examples of non-tax capital leases include a ‘$1 Buyout Lease’ and a ‘10% Purchase Upon Termination (PUT) Lease’. In many cases, the amount you save in taxes will be MORE than the total of your first year’s payments.
You may also obtain an equipment loan using an Equipment Finance Agreement (EFA) and still take the Section 179 Deduction.
Advantages of Leasing and Financing
The obvious advantage to leasing or financing equipment and then taking the Section 179 Deduction is the fact that you can deduct the full amount of the equipment, without paying the full amount this year. The amount you save in taxes can actually exceed the payments, making this a very bottom-line friendly deduction (you are reading this correctly – in many cases, the deduction will actually be profit.)http://www.section179.org/section_179_leases.html