Thinking about buying trucking equipment before the end of the year? The whirlwind of December usually comes and goes in the blink of the eye. However, this is the time many buyers take advantage of closeout sales, end-of-year deals, and the opportunity to wrap up the fourth financial quarter on a strong note.
If you’ve been weighing the option of getting a head start on 2017, it could be a good time to add to your inventory. With the benefit of Section 179, it’s ideal now more than ever.
The Section 179 deduction of the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) expanded to $500,000 this year, which provides a hefty tax relief for the 2016 tax year. However, the stipulation comes with a deadline: all equipment and/or software must be purchased, financed, or leased and put into service by midnight of December 31, 2016.
Advantage Given to the Buyer
What does the tax code mean for the consumer? As a company, business owner, or buyer, you are in a prime position to save thousands of dollars on necessary equipment as you head into the new year.
The countdown is on for you to make a decision that will allow you to take advantage of this tax code before time runs out. By financing your truck(s) and other used heavy equipment now, your entire purchase can be considered a 2016 deduction, if done by the deadline. You’ll only be making a single payment toward this purchase order for the rest of the current year.
With that comes of dollars in savings for you and your company, which can definitely help boost the first quarter or assist in more comfortable projections in 2017. You’ll have the equipment you need at a lower price point than originally budgeted for.
Looking into the advantages of this tax code is worth heavy consideration, especially if you were already thinking of adding to your inventory. When you meet the deduction of $500,000, your company will be able to write it off on its 2016 taxes.
Say you financed a million dollars’ worth of equipment by the December 31st deadline, you would see a cash savings of approximately $280,000. Wouldn’t it be nice to take advantage while you still can? Calculate approximately what kind of savings that might mean as a result for your specific purchase needs. While it’s a race against the clock, you do have a few weeks before getting everything squared away and set up nicely for the new year.
Do You Qualify for the Deduction?
If you buy equipment or property, which you will use in your business for more than 50% of the time, you qualify for the Section 179 deduction. This goes for both new or used purchases that the IRS determines will last more than one year.
Preowned trucks, trailers, and other trucking equipment qualify under this tax code and you want to make sure you’re planning accordingly as to not let the opportunity slip by.
2017 On the Horizon
As you budget for the new year, take a look at the broad overview of your company goals. How much growth do you expect? How much will you need to sustain that growth? By looking at the big picture, as well as tracking progress quarterly, you can end up saving money now just be taking the initiative to do a little more planning ahead.
While you have until midnight before the turn of the new year to make a decision, take a close look at your budget, resources, and equipment needs now to get the paperwork started early. If you were considering purchasing new trucks or equipment at all in 2017, you’ll want to take advantage of this tax code, especially since the year is almost expired.
Doing so can keep you from spending hundreds of thousands of dollars more than necessary come springtime or later next year. Get ahead and save money now on what you’ll know you need. In addition to finalizing budgets for the first quarter and beyond, you can close out this last month by tallying up just how much you’d save on equipment while 2016 is still in session.
Consider your purchase needs, buying options, and check with your tax preparer to see if it makes sense for you.