If you’re assessing your equipment and business needs as we head into the last quarter of the year, there’s good news for buyers, and sellers can also benefit. That good news is a U.S. tax benefit calledÂ Section 179.
Despite its lackluster name, Section 179 packs a punch when it comes to the tax deductions* it offers equipment buyers, who can deduct the full cost of equipment (either new or used) purchased before the end of the year from 2023’s taxable business income – up to US$1,160,000!
And that’s great news for sellers too, because U.S. buyers looking to capture the tax savings Section 179 offers will be motivated to complete their purchases by the end of 2023, meaning strong demand and strong pricing for used equipment.
A closer look at Section 179
Many people think the Section 179 deduction is some mysterious or complicated tax code. But it really isn’t. Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves.
Here are some key points to know about Section 179. Equipment must:
- Be within the specified dollar limits of Section 179.
For 2023, the deduction limit is US$1,160,000 if you purchase $2,890,000 or less of trucks or equipment.
- Be placed into service in the same year the deduction is being taken.
For 2023, buyers must purchase the equipment AND start using it for their business by December 31, 2022.
- Be purchased and used for business.
Simply put, it’s got to be used for the buyer’s business. A motorcycle probably won’t qualify, but a dozer bought at auction most likely will.
Sell now – waiting buyers need your equipment for 2023 tax savings!
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