Tax Update 2021: Opportunity Knocks Again
In what has become an October tradition for Liberty Coach, it’s time for our annual update on year-end tax breaks available to qualified new and used coach buyers.
Once again, major federal legislation has had a positive impact on available tax benefits. Under the terms of the CARES Act, which was signed into law in March 2020, the Section 179 deduction has been increased to $1,050,000 for tax year 2021 and beyond. The limit on equipment purchases has also increased, from $2.5 to $2.62 million. What’s more, bonus depreciation is still 100% through 2022, after which it will begin phasing downward.
All of which means it’s an exceptionally good time to buy a new or pre-owned Liberty Coach to be used in your business. To illustrate, consider the following examples outlined by our tax expert:
New Coach Purchase of $2,000,000: A new coach purchaser can receive the benefit of the increased small businesses deduction for the first $1,050,000. The Section 179 deduction is phased out $1 per $1 when the investment limit of $2.62 million is reached. As a result, the purchaser can claim a deduction of $1,050,000 and then apply the 100% bonus depreciation for new equipment to the remaining balance.
Pre-Owned Coach Purchase of $1,200,000: Like the new coach purchase described above, the buyer may deduct $1,050,000 of the purchase price under Section 179. And because bonus depreciation now applies to used equipment, can also be deducted just like with a new coach.
For more detailed information, we encourage you to download and read our 2021 Tax Update, then talk to your tax advisor to see if you qualify.