Leasing Tax Benefits and Advantages
Tax Alert! Economic Stimulus Act of 2008 has been extended through December 31, 2009.
Last chance to take advantage of this special stimulus! The Economic Stimulus Act of 2008, also called HR 5140, is a new tax act that was signed by the president on February 13, 2008.The act includes benefits for individuals and for businesses. The terms of the act include two temporary incentives designed to spur capital equipment purchases: restating the 50% bonus depreciation and increasing the Section 179 IRS rules expensing limits.
To be eligible to claim bonus depreciation, property must be 1.) eligible for the modified accelerated cost recovery system (MACRS) with a depreciation period of 20 years or less, 2.) Computer software, 3.) qualified leasehold property. The property generally must be purchased and placed in service during 2008. Property must be new to you and placed-in-service date must occur after December 31, 2007 and before January 1, 2009.
Tax Act At-A-Glance
Bonus Depreciation:
- 50% additional first-year depreciation on MACRS property with recovery period of 20 years or less
- Remaining basis (the other 50%) depreciated under normal MACRS rules
- No Industry Restrictions
- Property must be new, ordered, purchased and placed in service during Calendar year 2008
- Will expired on December 31, 2009
- Expiry extended one year for property with recovery period for 10 years or longer, for transportation
- property(property used to transport people or property), and for certain aircraft.
Bonus Depreciation:
Non-Tax/Capital Leases
The benefit of this lease type is that it can take advantage of Tax Code Section 179 and expense up to the amount allowed for the year the equipment is installed. Examples of this type of lease include $1.00 Buyout and 10% Purchase Upon Termination (PUT) leases.
Under 2009 Section 179 and assuming a 35% tax bracket, you can actually see a significant tax savings compare to 2007 tax incentives. Equipment Leasing and Financing will allow you to take advantage of this business economic stimulus act of 2008. Always consult your tax profession before making any decisions on what is best for your equipment financing and leasing needs. Our information should not be construed as an advice. Leasing typically have more advantages than traditional bank notes.
|
Example: Equipment Cost = |
$125,000 |
|
1st Year Write Off: Section 179 ($112,000 is maximum write-off) |
$112,000 |
|
Normal 1st year Depreciation ($125,000 - $112,000 = $13,000 x 20% = $2,600) |
$2,600 |
|
Total 1st Year Deduction ($112,000 + $2,600 = $114,600) |
$114,600 |
|
Tax Savings Assuming Rate of 35% ($114,600 x .35 = $40,110) |
$40,110 |
|
1st Year Bottom Line Cost ($125,000 - $40,110 = $84,890) |
$84,890 |
* Depreciation calculated at 5 years.
We can help you with all your business equipment financing needs through equipment leasing and financing. Please contact your Account Lease Specialist for details. 888-798-3976.
To Compare our lease rate factors, please click here. As always you can also request for instant equipment lease quotes, please click here
Liberty Capital Group, Inc. is an equipment leasing and financing company located in San Diego. We can help you with all your equipment leasing needs from office equipment to commercial vehicles to heavy machinery. Let us help you lease your next equipment. As they say "lease what depreciate and buy what appreciate". Grow your business today with equipment financing and leasing at no or minimal initial capital outlay. We have lease programs at $0 down. Call now!
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