Equipment financing “is an active market,” says Michael Brown, president of Washington Federal’s Equipment Finance Division, headquartered in Phoenix, Ariz., which has experienced tremendous growth in the six years since the nearly-century-old institution added the product to its portfolio. And this month is ripe to see even more activity in this area in the final weeks before the expiration on December 31 of two business deductions.
Under Section 179 of the U.S. Tax Code, a business can write off 100 percent of the cost of certain qualified assets — which includes new and used machinery, vehicles and office equipment — but they must be not only purchased but put into service during this calendar year. For asset purchases up to $2 million, the maximum deduction is $500,000; this will drop dramatically in 2014 to $25,000. The second deduction comes from an additional provision of Section 179 — a 50-percent bonus depreciation, with no cap on the amount.
Businesses seeking equipment financing can get a fast turn-around from the bank, Brown says, but notes, “The bigger challenge is getting the asset from the vendor [in time].” However, he emphasizes, “Any business that is trying to take advantage of these deductions prior to Dec. 31, 2013, should consult with their tax experts.”