Leasing Versus Buying Under The New Section 179

Now that the IRS Section 179 deduction permanently offers small businesses an immediate expense deduction of up to $500,000, some of the property you may have leased in the past could serve you better when purchased, at least from a tax deduction standpoint.

According to the IRS, this property may include specific equipment, vehicles, computer software or structures, including:

  • Tangible property (like office furniture or computers) acquired for business use.
  • Machinery or equipment that is integral in manufacturing, production or extraction, or that provides transportation (such as company vehicles), communications, electricity, gas, water, or sewage disposal services.
  • Off-the-shelf computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified.
  • Very specific buildings or structures including research facilities, storage facilities, or single-purpose agricultural (livestock) or horticultural structures, certain restaurant property, and certain commercial property improvements.

Section 179 is designed to help small businesses. If you don’t use the property solely for business purposes, don’t fret. You may still be able to deduct it at the percentage it’s used for business. For instance, if you use your laptop 80 percent of the time for business, you can deduct 80 percent of the purchase cost.

Estates and trusts cannot elect the Section 179 deduction, and property acquired by gift or inheritance does not qualify. Certain other situations may affect the $500,000 limit as well. These may include:

  • The cost of your section 179 property placed in service exceeding $2 million.
  • Your business being an enterprise zone business.
  • You placing in service a sport utility or certain other vehicles.
  • Whether you’re married and filing a joint or separate return.
  • Whether you’re a partnership, S corporation or another type of corporation.

Finally, having a dollar amount in place permanently can allow small businesses to plan ahead with their purchases. But with so many restrictions and exceptions to the rule, it’s important to consult a tax professional first. Before renewing or signing any leases on equipment, vehicles or other property this year, contact us to help you develop a game plan.Image Copyright: mavoimage / 123RF Stock Photo

Client Spotlights

A terrifying home invasion involving men with masks and guns set Pam Wood on an unexpected path to business ownership in 1981….
What happens when you combine a passion for creating, a knack for business, and deep family values? For Scott Klingler, owner of MergeWorks, it resulted…
Bessie M. Irizarry loves embracing a good challenge. It’s one of the many reasons she’s earned respect as a female engineer and business owner in…
San Antonio native Mark Lopez can’t recall a time he didn’t envision himself following the footsteps of his father, a project manager, into the construction…
Siew Pang knows that the key to unlocking the American dream can be discovered by embracing unexpected opportunities….
If you’re a San Antonian, you may not want to imagine your weekend without brunch at the city’s beloved Magnolia Pancake Haus….
Greg Thompson has long respected money and how it can catalyze greater things….
You may not be aware of it, but Don Lasseter has helped you throw a party. How do we know that? He’s the franchise owner…
Land surveyors aren’t known for exceptional customer service. But why shouldn’t they be? David Breaux set out in 1998 to prove that treating customers right…
When Lance Rose sees a business need, he fills it. That’s how he and Terri, his wife of 30 years, have evolved into the proud…
Matt and Lara Bruhn met while in graduate school at Harvard. He served as an officer and F-15C pilot with the U.S. Air Force….
Growing up in Piedras Negras, Coahuila, Mexico—just south of Texas along the Rio Grande—Oscar E. Flores dreamed of becoming a designer….

Blogs and Articles

The Goldilocks Rule for Tax Withholding

How Inherited Assets Affect Your Taxes

Getting Hit by Someone Else’s Bankruptcy

Welcome to Texas: Cutting Tax Ties with Your Previous State

Reaching the Unreachable IRS

How Is Costco Gold Taxed?

Yes, You Do Still Have to File Taxes

Retirement Plan Perks for Texas Small Businesses

Top 6 Worst Social Media Tax Tips

What’s Happening with the Corporate Transparency Act?

Love & Marriage & Your Business Assets

How Small Business Owners Reduce Taxable Income

Spot These Tax Scam Signs Before It’s Too Late