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Bonus Depreciation – At a Glance

By: Airfleet Capital, Inc.

Bonus Depreciation and Section 179 expensing have been hot topics for aircraft buyers in recent history. In particular, the past 2 years, as we have held our breath to see if Congress will extend the benefits for the new tax year. As determined earlier this year, increased Bonus Depreciation and Section 179 expensing are available through 2013 and even into 2014 in some cases. That means aircraft buyers can still take advantage of the benefits these tax incentives afford us.

While we are not the experts on tax law, we find that many of our customers are motivated by these incentives, so we have included a short overview of the current benefits below:

*Bonus Depreciation:

50% bonus depreciation allows the buyer to accelerate depreciation by writing off 50% of the cost of a new aircraft within the first year. There are a few requirements in order for the purchase to qualify:

  1. The equipment must be brand new and cost over $200,000.
  2. The aircraft must be purchased and placed in service before the end of 2013. - If the aircraft will not be delivered until 2014 then a contract must be in place and a non-refundable deposit paid prior to the end of 2013.
  3. The aircraft must be used primarily for business.

*Section 179 Expensing:

Section 179 expensing (tax deductions for equipment purchases) is increased to $500,000 for a new or used aircraft purchase this year. This includes the purchase price along with any upgrades to the aircraft and is in addition to the 50% bonus depreciation identified above. In order to take advantage of this benefit, your purchase must qualify:

1. For the full $500,000 expensing benefit, the maximum allowable amount spent on capital purchases for the year is $2.5 million.

These benefits are ideal for business owners in need of a write-off this year to lower their tax burden for 2013. Hopefully one or both of these can be applied to your business as you are considering an aircraft purchase this year.

For information on how IFA's Aircraft Finance Program can help you get into a new or used aircraft please call 800-920-5190. IFA's Aircraft Finance Program offers nationwide financing that is fast, simple and easy. Financing includes the full range of Part 23 aircraft with loans starting at $50,000 up to $5 million.

*Please consult your tax attorney for further details/stipulations and how you can utilize these benefits this year.