Section 179 Tax Deduction
Did you know? Purchasing a bus for your operation before the end of the tax year can result in major tax deductions for your operation. Buses, vans, and other vehicles utilized for business purposes can qualify as part of Section 179’s list of eligible equipment that can be written-off. We recommend consulting your tax professional and Section179.org for the most up-to-date figures for this year’s compensation amounts and qualifying equipment. You can also stop by Creative Bus Sales or contact us to chat with our experienced professionals regarding heavy equipment you can purchase before the end of the tax year. With 18 dealerships across the United States, we stock inventory in all regions, giving our customers access to the widest section at the best prices.
If you made a major heavy equipment purchase in the last tax year, you might be eligible for a Section 179 tax deduction. Consult a professional before filing, but keep reading to learn more about this particular deduction.
What is Section 179?
Section 179 incentivizes businesses to purchase new equipment and invest in themselves. This stimulus act is greatly beneficial for small business seeking immediate tax relief. Traditionally, major purchases could be written off incrementally on a yearly basis, but only through their depreciation value. For example, if you spend $100,000 on one machine, you might be able to write it off one year at a time in $20,000 increments. (We’ve chosen numbers that don’t reflect real rates of depreciation.) Section 179 allows business owners to deduct the entire cost of the equipment in the first year instead of waiting to write-off the cost during upcoming years.
How to Use Section 179
Many of our customers have successfully been able to write off their buses for their operation during the tax year the vehicle was acquired. A tax year begins on Jan. 1st and ends on Dec. 31st. If you’re interested in purchasing a bus before the end of this tax year, contact us! Creative Bus Sales features a vast array of options ranging from all-electric LSV’s commonly used for grounds keeping to luxury limo buses that transport guests in style. Creative Bus Sales has over 18 fully stocked locations across the United States.
Section 179 Limits
It’s important to know the compensation amounts of Section 179 fluctuate on a yearly basis. The deduction limit for 2018 tax returns has increased to $1 million and limits on equipment purchases have also increased to $2.5 million. On top of that, the bonus depreciation is 100% now retroactively from September 27, 2017 through 2022, and the write-off now applies to used equipment as well. Please refer to Section179.org for the most up-to-date compensation amounts.
Finally, keep in mind that these machines have to be used for business-related purposes more than 50% of the time. If you buy heavy equipment for yourself and your personal property, then this won’t help you. You’ll also only be able to deduct an amount that corresponds to how often you use your equipment for business purposes. This means if you use your equipment for professional projects only 80% of the time, then you’ll only be able to deduct 80% of the total cost. In our earlier example, this would mean you’d only get to deduct $80,000 from the original cost.
Qualifying Equipment and Vehicles
Always keep in mind that only equipment utilized for business purposes qualifies for Section 179 and that not all equipment is eligible for the write-off. The official list includes the following:
- Equipment such as heavy machinery
- Tangible personal property used for business purposes
- Business vehicles that exceed a gross vehicle weight of 6,000 pounds
- “Off-the-shelf” computer software
- Office furniture and equipment
- Property that isn’t a structural part of your building
- Improvements to existing business buildings
If you are unsure if your purchases qualify, please ask your tax professional for assistance.