What are the Current Tax Benefits of an Equipment Lease?
While traveling to visit our daughters last month, my wife & I made an impromptu visit to a long time Clune customer who has booked 6 leases with our company over the past 8 years. The owner gave us a tour of his business and pointed out the equipment they are financing with a Clune lease program.
It was most gratifying to hear that our service enabled him to run his business efficiently, our finance terms were cost effective, and the lease options he chose were also eligible for tax benefits. He was essentially “preaching to the choir” in that he clarified a common misperception about the eligibility of an Equipment Lease for Section 179 Tax Benefits.
The truth is that businesses are eligible for Section 179 Benefits when financing their equipment assets with a Capital Lease. You can calculate your benefits with this tool:
Basically, if you have an operating lease that requires you to return the equipment at the end of the lease, you can only deduct the lease payments. On the other hand, if you have a Capital Lease, or the lease results in ownership of the leased equipment, you can depreciate the cost of the equipment.
Additionally, under The Tax Cuts and Jobs Act passed in April of 2018, new rules and limitations for depreciation increased the allowance from 50% to 100% of the cost of qualified property that was acquired.
Be cautious when researching answers to your questions and always verify that you are on an official IRS site. such as this link which explains the laws on deducting lease payments vs. depreciation of leased equipment. It is also recommended that you consult with your tax advisor to verify your eligibility of tax benefits before you acquire equipment.
You never know when we might be in your neighborhood. We would love to stop by for a visit to hear your story and determine if our services could benefit your business.
It’s the lease we can do,
Kevin F. Clune, CLFP
