buying equipment?

Discussion in 'Lawn Mowing' started by 2 clowns mowing, Jul 30, 2007.

  1. 2 clowns mowing

    2 clowns mowing LawnSite Senior Member
    Messages: 566

    tax wise is it better to buy outright or make payments on new mowers and trucks? to this point i've paid cash for everything and was thinking it might be better to pay it off than buying it with cash. i've been told to buy the best and make payments and it will help with my taxes. my credit union told me i could get a loan but would have to freeze a part of my savings and will be paying it off with interest, but i might as well just pay cash for it. do banks loan without freezing my cash?
  2. Tim Wright

    Tim Wright LawnSite Bronze Member
    Messages: 1,034

    Get someone to co-sign and they should lend fine.

  3. TSG

    TSG LawnSite Senior Member
    Messages: 444

    Weather you pay cash or get a loan, look into filing a "196" form with your taxes
    to accelerate the depreciation. You never know if deductions will be disallowed with new elections.
    If you really want to max your tax benefit, put it on a home equity loan or business
    loan and the interest is then deductible.
    Also, why use your money if you can use someone else's at a low interest rate.
    Just .02
  4. supercuts

    supercuts LawnSite Silver Member
    Messages: 2,790

    ive had the money with the last 2 mowers but finance at 0% to help my credit ratings, thats always a plus in my book, if you have the money, put it aside

  5. Scagguy

    Scagguy LawnSite Bronze Member
    Messages: 1,522

    Almost al credit unions have what is called "right of offset". which means that some or all of your monies that you have on deposit with the credit union are at risk if you were to defauilt on the loan. Banks on the other hand do not have "right of offset" rules like your credit unions have. Like any other piece of machinery, a mower is a depreciating asset. Pay for it as you use it. Don't pay cash for it.
  6. Mow N GO 06

    Mow N GO 06 LawnSite Member
    Messages: 79

    If it is 0% interest, use that...It's always better to use someone else's money for free. Pay it off before the deadline and Youstill get the tax credits. Plus, you have kept a positive cash flow in the bank.....can we say??? DUH
  7. pclawncare

    pclawncare LawnSite Senior Member
    Messages: 991

    I am looking at buying a new truck probably 2500/3500 in the next year basicly when ever i find one after january that i like. I am fairly new to the tax game but have an accountant and have been paying taxes on my business for the past 4 years but untill last year i had been small now im growing alot and learning alot. Basicly what i want to know i will have cash for the truck without wiping out all my savings or reserves but would it be to my advantage to take out a loan on the truck and then write off the truck and the intrest paid on it? or would it be more of an advantage and a better move to just pay for it out right?
  8. 2 clowns mowing

    2 clowns mowing LawnSite Senior Member
    Messages: 566

    thanks for your help

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