Section 179 Financing. Deduct It This Year. Pay Over Time.

Section 179 lets a business deduct the cost of qualifying equipment in the year the equipment goes to work, instead of depreciating it over several years. The deduction belongs to whoever owns the equipment for tax purposes, and it depends on the equipment being placed in service during the tax year and used in the business, not on how much of the price has been paid.

That is why the structure of the financing matters. An equipment finance agreement or a $1 buyout lease is a conditional sale for tax purposes: you own the equipment, you take depreciation, including Section 179 and bonus depreciation, and you deduct the interest part of each payment. A true lease, such as a fair market value lease, leaves ownership with the lessor; you deduct the rent, and the lessor takes the depreciation. Crest Capital’s Section 179 qualified financing uses the ownership structures, so the equipment can be deducted in the year it goes to work while only a few payments have gone out.

The deduction is based on the cost of the equipment, not on what you paid for it this year. With Section 179 financing, your cash out in year one is a few monthly payments, and the deduction still covers the full price. On a $100,000 purchase in a 35% tax bracket, the first-year tax savings come to about $35,000, an illustration you can adjust for your own numbers on the calculator.

Payments are fixed for the full term, 24 to 84 months, so the tax savings and the payments are both known from the start. Most qualified applicants receive 100% financing, and soft costs such as shipping, installation and training can be included, up to 25% of the loan amount. The cash you would have spent on the equipment stays in the business for the work the equipment brings in.

Section 179 covers tangible business equipment and off-the-shelf software: machinery and manufacturing equipment, construction and heavy equipment, trucks and work vehicles, medical and dental equipment, shop and service equipment, computers and office equipment. The equipment must be used more than 50% for business. Used equipment qualifies when it is new to your business.

Vehicles follow their own rules: the Section 179 vehicle list covers trucks, vans and SUVs over 6,000 pounds, and software financing covers the programs your business runs on. For detailed qualifications, see IRS Publication 946 and your tax advisor.

Crest Capital finances established businesses: 2 or more years under current ownership, with creditors and comparable borrowing paid on time by the company and by its principals. Personal credit of 650 or better for owners of 20% or more in closely held companies is the benchmark, and some companies qualify on the business’s credit alone. There is no stated revenue minimum; stable or growing bank deposits that comfortably cover the proposed payment are what count.

Amounts run from $10,000 to $500,000 on one simple application, with terms of 24 to 84 months. The equipment is the collateral, with no blanket liens on most transactions. The full credit requirements are published in plain terms, so you can see where you stand before you apply.