Business Owners - Unlock the Benefits of Section 179

If you're a business owner looking to reduce your tax burden while reinvesting in your company, it's time to take advantage of Section 179—a powerful tax deduction that allows businesses to expense qualifying equipment and software purchases in the year they’re acquired. Whether you're planning to purchase machinery, vehicles, or software, this tax deduction can be a strategic tool to boost your bottom line.

An Example of Section 179 in Action Let’s say you purchase a 2024 GLS 450 Mercedes for $100,000 and use it for business purposes. Here’s how the deduction would break down under Section 179:

Step 1: Full Deduction
Section 179 allows you to deduct up to $25,000 for SUVs over 6,000 lbs but under 14,000 lbs. Since the GLS 450 qualifies, you can take the full $25,000 deduction immediately.
Step 2: Apply Bonus Depreciation
Bonus Depreciation, currently set at 60% for 2024, allows you to deduct an additional percentage of the remaining balance ($100,000 - $25,000 = $75,00.
Bonus Depreciation = 60% of $75,000 = $45,000.
Step 3: Total Deduction
Section 179 Deduction: $25,000
Bonus Depreciation: $45,000
Total Deduction for 2024: $70,000
This means you can deduct $70,000 from your taxable income in 2024 for the purchase of the GLS 450.

How This Saves You Money Let’s assume your business is in the 35% tax bracket.

Here’s how much you’d save in taxes:
* Total Deduction: $70,000
* Tax Savings: $70,000 x 35% = $24,500 saved in taxes

So, while the vehicle costs $100,000, your effective out-of-pocket cost (after tax savings) is reduced to $75,500.

Let’s dive into what Section 179 is, who qualifies, and how to maximize its benefits for 2024.

What is Section 179?
Section 179 of the IRS tax code lets businesses deduct the full purchase price of qualifying equipment and software purchased or financed during the tax year. Instead of spreading out deductions over several years through depreciation, Section 179 allows you to write off the entire cost in the year the purchase is made.

For example, if you buy equipment for $50,000, you can deduct the full amount from your taxable income in 2024, rather than splitting the deduction over five years. This can free up cash flow to reinvest in your business immediately.

Key Limits for 2024
* Maximum Deduction: $1,220,000
* Spending Cap: $3,050,000 (the deduction begins to phase out dollar-for-dollar after this limit).
* Full Phase-Out Threshold: $4,270,000 (businesses spending above this limit are no longer eligible for Section 179).
These limits make Section 179 particularly valuable for small and medium-sized businesses, ensuring they can deduct equipment costs and maintain liquidity.

Who Qualifies for Section 179?
If your business purchases, finances, or leases equipment during 2024, you’re likely eligible for Section 179, provided the following conditions are met:
1. The equipment/software is used for business purposes more than 50% of the time.
2. The equipment/software is placed into service between January 1, 2024, and December 31, 2024.
3. Your total spending on qualifying equipment is below $3,050,000.

What Qualifies Under Section 179? Most tangible business assets are eligible, including:
* Equipment and Machinery: Items used for business operations.
* Vehicles: Certain business-use vehicles (check IRS rules for specific limitations).
* Software: "Off-the-shelf" software used for business purposes.
For a comprehensive list, check out Section 179 Qualifying Equipment resources.

Section 179 vs. Bonus Depreciation
Section 179 and Bonus Depreciation are similar but have key differences:
* Section 179 allows both new and used equipment to qualify.
* Bonus Depreciation, currently set at 60% for 2024, applies to new and used equipment but is primarily beneficial for larger businesses spending over $3,050,000.
* Typically, Section 179 is taken first, followed by Bonus Depreciation, unless a business operates at a net loss and needs to carry forward the depreciation.

How to Maximize Section 179
1. Plan Purchases Strategically: If you’re planning to upgrade equipment or software, aim to place it into service before December 31, 2024, to qualify for this year’s deduction.
2. Track Business Use: Make sure the equipment is used more than 50% for business purposes.
3. Keep Detailed Records: Maintain receipts and documentation to calculate the deduction and substantiate your claim.
4. Consider Financing Options: Even if you finance your purchase, you can deduct the entire purchase price under Section 179.
5. Combine with Bonus Depreciation: If your total equipment spending exceeds Section 179’s limits, use Bonus Depreciation to maximize tax benefits.

Why Section 179 is a Game-Changer
Section 179 isn’t just a tax benefit—it’s an investment in your business. It incentivizes you to purchase essential tools, machinery, and software that help your company grow. By reducing your tax liability, you can allocate more resources toward expanding operations, hiring staff, or exploring new opportunities.

Final Thoughts
Section 179 is one of the most impactful tax breaks available to small and medium-sized businesses. If you’re considering new equipment or software purchases this year, now is the time to act. Remember, every business is unique, so it’s always a good idea to consult with a tax professional to ensure you’re maximizing your benefits.

Take advantage of Section 179 and set your business up for success in 2024!

Assalamualekum All, As you may be aware, at the beginning of 2024 a new federal law went into effect which effects most entities in the US called the Corporate Transparency Act (the “CTA”). The CTA requires certain information with respect to each Beneficial Owner of an entity to file certain information with the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”). For any entities formed before January 1, 2024, such information is required to be filed before December 31, 2024. For entities formed this year, this information is required to filed within 90 days of formation. For more detailed information about the CTA and what is required to be filed, please see the attached memo I received from an attorney friend. Failure to file will result in steep penalties and possible criminal penalties.

The BOI E-Filing System can be found here: https://boiefiling.fincen.gov/. You can do the filing yourself, it took me 10 minutes to complete the process. Make sure you save the transcript. Hope this helps.

Wasim Khan
Paradigm Business Brokers

Abu Dhar (may Allah be pleased with him) narrated that the Messenger of Allah (peace be upon him) said: “Whoever, after Fajr prayer, while remaining seated in the posture of prayer and before speaking to anyone, says ten times:

اللّٰهُ لَا إِلٰهَ إِلَّا هُوَ وَحْدَهُ لَا شَرِيْكَ لَهُ، لَهُ الْمُلْكُ وَلَهُ الْحَمْدُ يُحْيِي وَيُمِيْتُ وَهُوَ عَلٰى كُلِّ شَيْءٍ قَدِيْرٌ

(None is worthy of worship but Allah, He is alone, He has no partner, His is the Kingdom, for Him is all the Praise, He alone gives life, and He alone gives death, and He has power over everything.)

then ten virtues are recorded for him, ten sins are erased, his rank is raised by ten degrees, and he is protected from every undesirable thing and from Shaitan (Satan) for that day. He will not be taken to account for any sin except polytheism.”

In another narration, the words:
بِيَدِهِ الْخَيْرُ (“In Whose Hand is all that is good”)
are in place of:
يُحْيِي وَيُمِيتُ (“He alone gives life and He alone gives death”).

It is also narrated that whoever says this phrase after the Asr prayer receives the reward as if he has worshipped for the whole night, and whoever says it after Fajr receives the reward for the entire day.

Reference: Tirmidhi, ’Amalul Yaumi wal Lailah by Nasai

11/12/24 WealthBuilder Weekly Newsletter

This week, we delve into the latest rate cut by the Federal Reserve, what it means for mortgage seekers and real estate investors, and how the recent presidential election impacts economic policy and housing.

Key Takeaways
- The Fed's recent rate cut won't immediately lower mortgage rates due to broader economic pressures and post-election uncertainties.
- With Trump’s return to office, anticipated regulatory rollbacks could impact the real estate market, though changes may take time.
- In today’s economic climate, properties with strong cash flow offer the most stability. Investors should prioritize investments that perform well regardless of potential future rate cuts.


Rate Cuts Amid High Mortgage Rates
On November 7, the Federal Reserve announced a 0.25% rate cut, following a larger 0.5% reduction in September. This brings the federal funds rate down to 4.5%-4.75%, but potential homebuyers and investors shouldn't expect immediate relief on borrowing costs. Although rate cuts usually lower mortgage rates, current economic trends—such as high unemployment and election-related uncertainty—are keeping rates elevated.

Mortgage rates for 30-year fixed loans have risen to an average of 6.79%, higher than the September low of 6.08%. "As long as investors remain worried about the future, Treasury yields, and by extension, mortgage rates, will have a tough time falling and staying down," says Jacob Channel, senior economist at LendingTree.


What the Election Means for Real Estate
With Trump back in office, real estate investors are eyeing potential policy changes, especially around regulations and tax incentives. While a Trump presidency could mean less regulatory oversight and more incentives for real estate developers, it may also lead to higher economic growth, potentially driving inflation—and therefore interest rates—higher. Mike Fratantoni, chief economist at the Mortgage Bankers Association, anticipates a "higher growth economy, higher inflation, and hence, higher interest rates" under Trump.

For first-time buyers and moderate-income homebuyers, this could make homeownership even more challenging. "We should expect more volatility in the housing market," says Lisa Sturtevant, chief economist at Bright MLS. She predicts that Trump's policies might favor high-income individuals and existing homeowners, potentially making it harder for new buyers to enter the market.

Don’t Bank on Low Rates
Despite the Fed’s rate cuts, experts warn that mortgage rates may not dip close to pandemic-era lows. Lawrence Yun, chief economist at the National Association of Realtors, highlights that the budget deficit outlook under Trump could prevent rates from dropping significantly. Yun adds that further rate cuts from the Fed are unlikely unless Trump’s economic policies succeed in reducing inflation.

"Mortgage rates that low would require a significant economic downturn," says Fratantoni. "The circumstances that would bring mortgage rates down to that level again are not ones we’d like to see."

The Impact of Deregulation
A key focus of the Trump administration is expected to be rolling back regulations. For the real estate and lending industries, this could translate into easier loan approvals and increased building activity. However, Daryl Fairweather, chief economist at Redfin, cautions that housing supply may still remain tight, and affordability challenges could persist.

"Homes will still be in short supply, and the cost of borrowing isn’t likely to come down much," Fairweather says. "With Republicans in control, national housing affordability may not be a top priority, so the status quo could continue."


Final Thoughts: Focus on Cash Flow
In a time of economic and political uncertainty, investors should be cautious about relying solely on rate cuts or future economic conditions when making real estate decisions. The key to successful investing is in the fundamentals—specifically, targeting properties with strong cash flow potential that can withstand various economic shifts.

“One of the great things about real estate investing is that, when done well, it can succeed despite government decisions and economic fluctuations,” says real estate finance expert Stijn Van Nieuwerburgh. Instead of speculating on what might happen in the future, focus on properties that perform well now.

Practical Advice for Investors:
- Analyze Cash Flow: Ensure any potential investment property will generate sufficient cash flow after expenses.
- Look for Motivated Sellers: There are still deals available in the market from sellers willing to negotiate.
- Be Selective: Avoid speculating on future market conditions. Focus on deals that make sense in today’s climate.

With Trump's return, the real estate landscape is set for shifts, but the exact impact remains uncertain. As always, keep a close eye on economic indicators, adjust strategies as needed, and invest based on solid fundamentals.

Stay tuned for next week’s WealthBuilder Weekly Newsletter for more insights on navigating the changing financial and real estate landscape.

The Dark Side of Digital: The Impact of Digital Media Technologies on Our Brains, Bodies, and Souls
Monthly Seminar | Friday, November 15th, after 'Isha Prayer (7:30 PM)

Assalamu Alaikum wa Rahmatullahi wa Barakatuh,

Join us for an insightful evening on November 15th to examine the profound effects of modern digital technologies on our well-being and spirituality.

Insha'Allah, Dr. Ahmed Howeedy and Arfan Qureshi will lead this crucial discussion. Together, they bring a unique blend of medical, psychological, and Islamic perspectives to help us understand and navigate the complexities of digital media in today???s world. Please join us to:

???Explore how digital media impacts our mental and physical health;
???Discuss the effects on our children and strategies for balanced tech use;
???Learn techniques for maintaining spiritual well-being in the digital age;
???And much more!

Join us at Masjid DarusSalam or tune-in online: https://youtube.com/live/cpgWPqipq2Q?feature=share