Are you a landscaper in need of a new Skid Steer or Rock Hound, an electrician that requires a new cherry picker, or a flooring tech looking for a better floor grinder, or just a property owner that needs to buy a used excavator to rework his land,. If you’ve thought about getting new construction equipment, now is the perfect time to upgrade. Investing in new machinery in 2020 ensures you’re ready for next year’s projects and could shave thousands off your tax bill, as the guide below explains.
How to Take Advantage of Tax Deductions
The IRS requires some business purchase deductions to be spread out over several years as the property depreciates. For instance, if you bought a new business location or repaved your parking lot, you likely won’t be able to deduct the entire expense at once.
Fortunately, Section 179 of the tax code carves out an exemption for most tangible goods, allowing independent contractors and business owners to write off the entire value in the first year the item is put into service.
Types of Qualifying Purchases
The 179 deduction doesn’t cover all business expenses, but most physical tools and machinery qualify. This includes construction equipment, generators, and handheld instruments.
You can also fully deduct work vehicles—like large passenger vans that seat nine or more, cargo vans with no seating behind the driver at all, and tractor-trailers. However, if the vehicle has a potential personal use, the deduction is capped at $11,160.
Section 179 deductions are limited to $1,040,000 per item; total expenditures can’t exceed $2,590,000. If these limits don’t cover the full cost of the new equipment you need, consider splitting the purchases between this year and next.
Boosting Next Year’s Profits
Maybe your old backhoe is on its last legs or you don’t have the construction equipment to take on every job that comes your way. No matter your issues, starting next years’ building season with new equipment will set you up for success. Not only will you be able to tackle your routine jobs more efficiently, but you'll also be able to accept more prominent, more profitable projects, expanding your business's reputation.
With an extensive selection of construction equipment from Kubota®, Stihl®, Genie®, and other leading brands, ABC Equipment Rental and Sales proudly serves contractors throughout the Cleveland, OH, area. Whether you’re in the market for a backhoe or need a new forklift, their friendly staff will guide you through their inventory. Visit their website for more on their available equipment. Call (330) 220-4545 with questions.
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