Take Advantage of the Section 179 Tax Deduction
Practices interested in investing in new equipment or building upgrades may want to consider doing it before the end of the year.
Do you have a growing wish list of upgrades or expansions you dream of making to your veterinary practice? If your time and budget allow for it, an investment in remodeling before the end of the year has a number of benefits, including the potential for substantial tax savings.
Under the Tax Cuts and Jobs Act that was signed in December 2017, veterinary practice owners are able to take a tax deduction—known as the Section 179 deduction—of up to $1 million on qualified office upgrades in 2018, up from $500,000. The limit on equipment purchases was also increased from $2 million to $2.5 million.
Furthermore, qualifying deductible items expanded from office furniture, equipment, and off-the-shelf software to include roofs, heating, air-conditioning, ventilation systems, fire protection systems, and security systems. In addition, the first-year bonus depreciation increased to 100% on qualifying long-term assets.
By leveraging the Section 179 benefit now, many practice owners can take advantage of the $1 million benefit that allows them to deduct all or part of the price of qualifying purchases when they pay their 2018 taxes next year. Section 179’s “use it or lose it” deduction reduces the after-tax cost of acquiring depreciable business property by accelerating the tax deductibility of some or all of the costs of acquiring the assets.
Beyond the tax benefits, incorporating the latest technology and most efficient equipment offers a host of benefits to a hospital, such as improving the quality of care provided, enhancing practice efficiency, and helping attract and retain clients. These benefits can be realized sooner if the equipment or technology is purchased now, further improving efficiency and profitability.
To help achieve immediate savings, financial experts can obtain highly competitive financing rates for equipment, technology, and renovations. A financial expert can offer deferred payment options so practice owners can start generating revenue using new equipment now, maximizing after-tax savings on 2018 taxes, and paying for it next year.
Author’s note: This is not tax advice. We encourage you to check with your own adviser as individual scenarios vary; Henry Schein Financial Services does not provide tax advice.
Mr. Drayer is the vice president and general manager of Henry Schein Financial Services. If you want to hear more about year-end equipment financing or have questions about practice and patient financing options, call 800-853-9493 or email email@example.com.