One of the best money-saving tax provisions under current law is 100% bonus depreciation on newly acquired assets for businesses. There's still time between now and the end of the year to take advantage of this for your business if you're looking to acquire some new assets and need to save some money on this year's taxes.
There are a few main provisions to keep in mind when we're talking about buying business assets:
1) Your ability to write off a fixed asset for tax purposes is technically based on when you place that asset into service, not when you order it. So if you are going to need a few weeks to get something in house, you'll want to make that order right away.
2) How you finance the purchase has nothing to do with how much you can deduct in the current year. If you buy a $10,000 piece of equipment on 100% financing, you can still write that asset off right now. This can be really advantageous in the current low interest rate environment.
3) Real estate is the general exception to the 100% immediate deduction. However, there are strategies to get the full bonus depreciation on some portion of a real estate purchase.
4) Automobiles are a special case if they are going to be used less than 100% for business, and especially if they are going to be used less than 50% for business.
Fixed assets are one of the best ways to save some current year tax dollars, but they're also one of the trickier things to handle for someone that isn't deeply experienced with how to handle them. If you need someone to help talk you through these issues, please reach out to me ASAP!
Photo by Tierra Mallorca on Unsplash