As 2018 draws to a close, it’s becoming increasingly clear that among the big winners from last December’s Tax Cuts and Jobs Act are taxpayers who purchase certain types of depreciable assets, including motorcoaches.
The new tax law basically doubles the maximum deduction that can be made on such equipment under Section 179 of the 2015 PATH Act, from $500,000 to $1,000,000. The bonus depreciation percentage has been doubled as well, from 50% to 100%. And both may now be applied to used as well as new coaches – which translates into significant potential tax savings on any coach in our inventory. How significant? Consider the following examples outlined by our tax expert:
New Coach Purchase of $2,000,000: A new coach purchaser can now receive the benefit of the increased small businesses deduction for the first $1,000,000. The Section 179 deduction is phased out $1 per $1 when the investment limit of $2,500,000 is reached. As a result, the purchaser can claim a deduction of $1,000,000 and then apply the 100% bonus depreciation for new equipment to the remaining $1,000,000.
Pre-Owned Coach Purchase of $825,000: Deduct up to the first $1,000,000 of the purchase price under Section179. And because Bonus Depreciation now applies to used equipment, if the purchase price exceeds $1,000,000, the remainder can also be deducted just like with a new coach.
Of course, there are important details about qualified purchases and other regulations; for a full rundown, download our 2018 Tax Update. And of course, you should consult with your own tax adviser before making any decisions. But the bottom line is, there may never be a better time to buy a new or used Liberty Coach. So if you’ve been thinking of making a move, our advice is to do so before December 31st – and save every dollar you’re entitled to.