Bonus Depreciation Financing

Bonus depreciation and Section 179 address the same goal through overlapping but distinct rules. Where Section 179 is a dollar-capped elective deduction, bonus depreciation applies a percentage-based first-year write-off to qualifying property with no dollar cap on the equipment amount. For practices buying large imaging systems, the combination of both provisions can produce a first-year tax deduction that substantially exceeds what Section 179 alone allows. The financing structure still determines whether the practice qualifies for these deductions, and the right loan or lease type at closing makes the difference between a deduction you can take and one you cannot. We finance interventional radiology systems, DR rooms, C-arms, and complex imaging suites for practices specifically planning to use bonus depreciation in the acquisition year.

Bonus depreciation rules have changed significantly over the past several years, with the 100 percent first-year write-off that applied from 2017 through 2022 phasing down incrementally since. Practices planning a purchase for tax purposes should confirm the current bonus depreciation percentage with their accountant before structuring the deal, since the applicable rate depends on when equipment is placed in service under current law.

How Bonus Depreciation Has Evolved

The Tax Cuts and Jobs Act of 2017 established 100 percent bonus depreciation for qualifying property placed in service from September 27, 2017 through the end of 2022. That provision began phasing down starting in 2023: 80 percent for property placed in service in 2023, 60 percent in 2024, 40 percent in 2025, and 20 percent in 2026, before bonus depreciation is set to expire under current law after 2026. Congress has discussed extending or restoring the 100 percent rate, but no legislation has been enacted as of this writing.

The practical meaning for a practice buying imaging equipment: a $300,000 DR system purchased in 2024 might qualify for a 60 percent first-year bonus depreciation deduction of $180,000 (with the remaining $120,000 depreciated over the standard recovery period), compared to $300,000 if the 100 percent rate applied. The tax math still favors earlier deductions over later ones, but the magnitude differs from the 2018-2022 peak years. Your accountant has access to the most current applicable rate and should confirm before any year-end planning decisions. Practices specifically weighing whether to structure a purchase as a loan or a $1 buyout lease to preserve ownership treatment for depreciation purposes should read our loan and lease comparison first.

Financing Structures That Qualify for Bonus Depreciation

Bonus depreciation applies to property the taxpayer owns, not property held under an operating lease. This creates the same financing structure question as Section 179: a loan produces ownership and qualifies, a $1 buyout lease qualifies as equivalent ownership, and a fair market value lease generally does not trigger the deduction. The distinction matters because the monthly payment difference between a loan and an FMV lease on the same equipment is sometimes large enough that practices are tempted by the lower FMV lease payment without fully accounting for the foregone tax benefit.

For large imaging equipment purchases, the tax-adjusted cost of a loan or $1 buyout lease compared to an FMV lease is worth modeling before signing. A $400,000 cardiac imaging system financed as an FMV lease at a lower monthly payment might actually cost more on an after-tax basis than the same equipment financed as a loan at a higher payment if the bonus depreciation deduction is lost. We can help outline the structure options; the actual tax benefit calculation should be confirmed with your CPA.

• Equipment loan: qualifies for bonus depreciation (borrower owns the asset)
• $1 buyout lease: qualifies (ownership transfer certain at $1 cost)
• FMV lease: does not qualify for bonus depreciation (lessee does not own the asset)
• Bonus depreciation applies to the portion of cost exceeding the Section 179 cap used
• No dollar limit on bonus depreciation itself (unlike Section 179)

Combining Section 179 and Bonus Depreciation

Section 179 and bonus depreciation can be used together on the same purchase, and the order of application matters. Section 179 is applied first, reducing the cost basis on which bonus depreciation is then calculated. If you elect $1,160,000 in Section 179 on equipment that cost $1,160,000, there is nothing left for bonus depreciation to apply to, which is fine if Section 179 covers the full cost. If you are buying $2,000,000 in equipment across multiple pieces, Section 179 might cover the first chunk up to its cap, and bonus depreciation then applies to the remainder at the applicable rate for the tax year.

For imaging practices with multiple equipment purchases in the same tax year, the combination is especially powerful. An ambulatory surgery center that buys a C-arm, a DR room, and a fluoroscopy upgrade in the same year may have total equipment spend that saturates the Section 179 limit, with bonus depreciation then sweeping up the remainder. Coordinating the financing with the tax plan requires the accountant and the equipment lender to understand each other's timelines and deal structures.

Practices Best Positioned to Use Bonus Depreciation

Bonus depreciation is most valuable to practices with substantial taxable income, because it reduces the tax bill dollar-for-dollar at the practice's marginal tax rate. A practice in a high combined state-and-federal tax bracket gets more after-tax value from a bonus depreciation deduction than a practice in a lower bracket. This is not a reason to pass on the deduction, but it is a reason to quantify it before treating it as the decisive factor in an equipment timing decision.

Practices buying expensive, multi-component imaging suites, where Section 179 caps out and bonus depreciation applies to the remainder, benefit from understanding the deduction on both pieces. Cardiology practices buying cath lab systems, radiology groups building new imaging rooms, and hospital outpatient departments acquiring facility-grade equipment are the natural candidates for deals where both Section 179 and bonus depreciation together are relevant to the purchase decision.

Practices that operate as pass-through entities, sole proprietorships, partnerships, and S-corporations pass the deduction through to the owner's personal return. This is the common structure for most private imaging practices, and it means the owner's individual tax rate determines the ultimate value of the deduction. Your accountant should calculate the expected after-tax benefit at your specific marginal rate before the purchase year closes.

Structure Your Year-End Deal

If tax planning is driving the timing of your imaging equipment purchase, the financing structure needs to align with your accountant's plan before anything is signed. Tell us the equipment, budget, and intended tax treatment, and we will outline the structures that preserve your deduction eligibility. Bring your CPA into the conversation early so there are no surprises at the end of the year.

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