Category Archives: Financing

Medical equipment financing: Should I lease or buy?

For those who work in the purchasing departments for hospitals, medical offices or other organizations that use medical equipment, one of the most common questions is not so much what do we need to purchase, but what advantages might leasing medical equipment have over purchasing it?

There is no easy way to answer this question, but a review of the following key pros and cons of leasing vs. buying should help you decide what type of medical equipment financing is best for your situation.

Leasing pros:

  • Low upfront cost
  • Services, maintenance and warranty are often all wrapped up in the leasing price
  • When properly structured, leasing payments are fully tax deductible as an operational expense
  • Easy turnover if you want updated equipment

Leasing cons:

  • Not a good option if you plan to use the piece of equipment for a long time
  • The life of the lease may end up being far more than if you had purchased the equipment
  • You build up no equity, and with no option to resell the equipment, you cannot make any money back
  • Not all equipment can be leased

Purchasing pros:

  • Owning the equipment allows you make needed modifications or adjustments without violating the terms of a lease
  • Various tax incentives under Section 179
  • You don’t have to deal with contracts
  • Many medical equipment manufacturers have fantastic warranties
  • You can recoup some of the costs by reselling the equipment

Purchasing cons:

  • The initial cost can be considerable. This can prevent you from buying exactly what you want as well as tie up funds you may need for other purchases
  • Equipment may become outdated, especially digital technology
  • You must keep up with maintenance and front the cost of most repairs

Save Big with Section 179

Small business owners rejoice! With the Section 179 deduction, you can save big. Business owners who acquire equipment for their business, including medical equipment — like EKG machines and spirometers — are eligible for a section 179 tax savings.

What is Section 179?

As of January 1, 2016, the “Protecting Americans from Tax Hikes Act of 2015” (PATH Act) was passed by both the U.S. House and Senate and signed into law. This bill expanded the Section 129 deduction limit to $500,000. This tax savings allows a small business to obtain an enhanced deduction on equipment and software purchased or financed during the single tax year. In 2016, the spending cap on equipment purchases is $2,000,000, making Section 179 a true incentive for small business.

What else is new for 2016?

The 50% Bonus Depreciation will extend through 2019. This means businesses of all sizes can depreciate 50 percent of the cost of equipment acquired during 2015, 2016 and 2017. In 2018, the bonus depreciation will phase to 40 percent, and 30 percent in 2019.

Important for the 2016 Tax Year:
Section 179 provides significant tax relief, but only if you finance in time. All equipment and software must be financed and put in place by 12:00 a.m. on December 31, 2016.

Want to find out how much you can save? Check out this Section 179 Qualified Financing Calculator to see how much your business can save.