Mac-Gray News

Tax Relief in 2008 for Laundromat Owners

May 26, 2008

2008 has suddenly become a great year to invest in your business. The Economic Stimulus Act of 2008 that was signed into law earlier this year offers some outstanding incentives for new-store development and replacement laundry equipment. If you have an older store with inefficient equipment or are considering opening a brand new store or a second location, this may be one of the best opportunities in recent years to act.

The federal government is allowing a 50% bonus depreciation for new capital expenditures such as commercial laundry equipment placed into service during 2008. The new law provides 40% more in tax deductions. For example: under the new law, purchasing new laundry equipment costing $100,000 – you could realize first-year depreciation of $60,000 (take the 50% off the top of the $100,000 plus an additional 20% of the remaining $50,000, which is $10,000). Owners just simply need to purchase new equipment and make sure it is put into service in 2008 to qualify for the 50% bonus depreciation.

In addition, the government has nearly doubled the amount that small businesses can write off for new and used equipment purchases in 2008. The cap rises from $510,000 to $800,000. If a business purchases more than $800,000 of equipment in 2008, the deduction can be limited. If the equipment purchase is more than $1,050,000, no deduction can be taken. These additional benefits are for 2008 only and will revert back to the old law in 2009.

Storeowners and new investors should meet with their tax advisor to determine how they can benefit from these economic stimulus initiatives. The 50% bonus depreciation will be eliminated after 2008.

Use the links below to read more about how section 179 can benefit your business:
http://www.section179.org/
http://www.irs.gov/newsroom/article/0,,id=179227,00.htmla>
http://www.senate.gov/~finance/sitepages/leg/LEG%202008/013008%20FINAL%20%20SFC%20Markup%20Doc%20%201-28%20(2).pdfa>

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