For all the tumultuous economic changes we’ve seen in 2020, it’s worth noting one thing that hasn’t changed: the exceptionally generous year-end tax breaks available to Liberty Coach buyers.
Thanks again to changes included in the Tax Cuts and Jobs Act of 2017, tax breaks available this year rank among the largest ever. Section 179 deduction and income phase-out limits – for qualifying equipment purchases made by business owners – stand at $1 million and $2.5 million respectively, and are indexed to inflation as well. Bonus depreciation is still 100% and may be applied to both new and used coaches.
So what does that mean to the Liberty Coach buyer? 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 million. The Section 179 deduction is phased out $1 per $1 when the investment limit of $2.5 million is reached. As a result, the purchaser can claim a deduction of $1 million and then apply the 100% bonus depreciation for new equipment to the remaining balance.
Pre-Owned Coach Purchase of $1,200,000: The buyer may deduct up to the first $1 million of the purchase price under Section 179. And because bonus depreciation now applies to used equipment, the remaining balance above $1 million can also be deducted just like with a new coach.
While these terms are available for coaches purchased and put into use this calendar year, next year may well be another story. Our advice: download and read our 2020 Tax Update, then talk to your tax advisor to see if you qualify. This may well be the best time ever to buy a Liberty Coach.