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Leasing equipment not only conserves valuable capital and preserves existing bank credit lines, it's also valuable as a tax savings tool.
And who wouldn't want to save money at tax time! Here are three big ways you can make your lease purchase tax deductible - in some cases up to 100%!
- Direct Expense the Lease Payment
A "true" lease can be structured so that lease payments are fully expensed as incurred. This will accelerate tax deductions on equipment acquisitions when compared to lengthy and complicated depreciation schedules. With Lincoln Electric Capital, you have the option to purchase the equipment, continue to lease the equipment or return the equipment.
- No Advance Sales Tax Expense
Another tax advantage with leasing is that there is no advance payment of sales tax. The sales tax is simply added to the lease payment either as sales tax or use tax on the payment. This further reduces the up-front acquisition cost of gaining the newest technology for your business.
- Use IRS Section 179 to take up to a $125,000 deduction this year and spread the cost over several years.
- In 2003, the federal government dramatically changed tax code. The maximum amount that is eligible for immediate tax write-off for machinery and equipment increased from $25,000 to $125,000 for the 2007 tax year. With a $1 Purchase Option Lease (finance lease) through Lincoln Electric Capital a business can deduct up to $125,000 from its 2007 taxable income. The advantage of this method is that your business receives the tax deduction for the entire cost of the equipment in the current tax year while spreading the cost of the purchase over many years.
*Note: Consult your tax consultant for professional tax advice.
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