Recently passed congressional legislation, the Protecting Americans from Tax Hikes Act of 2015 ("PATH" Act), have important favorable tax implications for businesses that purchase or lease new or used equipment in 2015 and subsequent years. Known as an IRS Section 179 deduction, taxpayers may elect to deduct as an expense the entire cost of equipment (and certain other property) from income tax returns filed for calendar year 2015 and coming years, subject to a few limitations. In effect, Section 179 accelerates the deductibility of equipment acquisition costs that customarily are spread over a period of years and classified as depreciation. Congressional action taken late in 2015 relaxes restrictions and increases dollar limitations previously imposed for Section 179 deductions. Please visit our FAQ to learn more.
And yes, when structured as a capital lease (commonly known as a “$1.00 Buyout Lease” and “10% Purchase upon Termination Leases (‘PUT’) Lease”), leased equipment otherwise meeting the limitations of Section 179 purchases is eligible for Section 179 benefits. Create credits available to offset earned income in 2015 greater than total finance costs. There’s also an additional incentive: if the business generates little or no income in 2015, carry forward credits to subsequent years. Interested? Contact us for a referral to a Section 179 qualified equipment finance lender.
Before you decide to purchase a new or used Harben jetter, there are good reasons to consider lease financing as an alternative to paying cash or seeking installment debt financing. If this is your first jetter, leasing will help jump start your business by preserving operating cash flow for operational requirements. You can operate your jetter usually with less money down and a lower monthly payment than with traditional financing.
And, leasing may provide tax advantages by permitting all costs to be expensed during the lease period. Choose a lease plan that increases the margin of projected operating income over monthly lease payments. At the end of your lease, select from several purchase options or simply return the equipment with no further obligation.
When you lease a trailer, truck or skid mounted Harben jetter, your monthly payment recovers the calculated depreciation of the equipment's original value (its capitalized cost) during the lease period, plus a service fee. That means you pay only for the portion of the equipment's worth that you expect you will use. And, in determining the equipment's capitalized cost, you'll be able to include the cost of all tools and accessories needed to operate the machine plus sales tax and freight costs. Lease jetting equipment, video inspection systems or accessories valued from $3,000 to $150,000.
Choose from several lease financing plans. A limited term lease allows you to deduct 100% of the monthly lease payment as an operating expense without incurring an obligation to purchase the equipment at the end of the lease period. Or, as an alternative, you can adjust the residual value of the equipment financed to assume full depreciation of the truck, skid or trailer jetter within the lease term, allowing you to buy-out the lease contract at the end of the lease contract for $1.00. As an alternative, you may choose to specify a residual value of up to 10% of the original transaction amount. A capitalized cost reduction option, similar to a down payment, also can help reduce your monthly payment.
Our leasing consultant will be pleased to help you structure a program suited for your tax and financing needs. These include master leases for companies that anticipate adding equipment throughout the year, a "Young Business Program" for startup businesses and deferred or step payment plans designed to match anticipated revenues at the start of the lease with financing costs.
You'll be pleased to know that the lease plan you choose and its cost are not influenced by expected hours of use or miles traveled, typical of vehicle leases. Because Harben jetters hold their value over many years, the remarketing risks assumed by lenders is low. This allows our financing partners to focus on your credit worthiness and business skill in structuring lease terms.
To save time, you can even apply for approval of your lease on-line. Then, discuss equipment lease or debt financing options with an account manager. We're looking forward to helping you succeed. We're looking forward to helping you succeed.