Tax Benefits of Buying Now

Investing in your equipment this year can be a smart move. This is especially true since many business owners and manufacturers have delayed and put-off replacing old equipment the last couple years. There are 2 great reasons to buy now.

The first good reason to buy now is Bonus Depreciation. All “qualified” equipment purchased and placed into service by December 31, 2011 can take a one-time bonus depreciation deduction of 100%. For “qualified” purchases made in 2012, that deduction is reduced to 50% so, this year is definitely the time to make a move. Most equipment directly pertaining to the operation of a business will “qualify” but please check with your accountant to know for sure.

The second reason is the increased Section 179 Expense Deduction. In 2011, qualifying Section 179 equipment can be expensed up to $500K and for 2012 the amount is reduced to $250K. This amount may be reduced if the cost of all Section 179 equipment in 2011 exceeds $2 million.

Consult your tax advisor to see what equipment qualifies for these extra tax incentives. Depreciation and expense deductions are incentives tied to the timing, use and type of asset purchased which are factors you should also discuss with your accountant.