Posted In Taxes Accounting | Posted On 17, March 2020 | Posted By AB Value Team

Finance equipment purchases


The great thing about financing your equipment is that you get to write off a generous value of the equipment and purchase price for taxes and get the tax benefit in the year of the purchase, but the only cash that left the business was the payments towards the loan. This payment of the financed loan will help improve cash flow of the business because the tax benefit of the tax deduction will help keep those taxes minimal.


For example, if you purchased equipment in 2020 that cost $50,000 and you are paying off the loan now, you can check to see which tax write-off (100 percent bonus depreciation or first-year expensing up to $1,000,000) can be used. If you are in the 25 percent tax bracket, a full write-off effectively saves you $15,000 in taxes (cash that you didn’t have to spend). You still get the tax savings even if you have not paid off for the equipment you purchased.

In 2020, consider using this strategy if your business needs new or additional items. Check write-off rules for this year, to make sure you plan out your asset strategies.




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AB Value Team

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