You purchase heavy equipment through your LLC, finance most of the cost, and deduct the full purchase price from your taxable income, either immediately or over several years, depending on which tax strategy you employ. The equipment is placed in a nationwide rental fleet, where it earns monthly rental income while you own it.

No. You own the equipment through an LLC (if you don’t have one, don’t worry, they’re very easy to set up), but between Taxcavators and the rental yard, we make it easy—storage, maintenance, and renting it out. So you don’t have to be in the construction business now. But you will be when you’re done!

IRC § 179 allows you, in certain circumstances, to deduct 100% of your equipment purchase price, up to $1,250,000, in the first year (for purchases made in 2025), significantly lowering your taxable income. If you don’t qualify for the 179 deduction, you can take advantage of bonus depreciation (IRC § 168(k)). For 2025, that means taking 40% of the total depreciation this year and spreading the rest of it over five years (the depreciation schedule for heavy equipment). The deduction is the same either way. It’s just a matter of whether you can take it all now or have to spread it out.

Section 179 allows you to deduct the full cost of equipment up to $1,250,000 in 2025. Purchases between $1,250,000 and $3,130,000 qualify for full Section 179 deductions plus 40% bonus depreciation on the excess amount. The deduction phases out dollar-for-dollar above $3,130,000, disappearing entirely at $4,380,000, where only bonus depreciation applies. However, Section 179 cannot be used to create a net operating loss (meaning in most cases you can’t use a deduction in business A, the one you purchase equipment through, to offset gains in business B or personal gains). That means 179 is best for pre-existing active and profitable businesses purchasing equipment.

Bonus depreciation, if used starting on dollar one of the purchase, can create a net operating loss, which means this is a better option for those setting up a new LLC for the purpose of taking part of this program. The first 40% of the deduction will be taken this year, and the other 60% will be spread out over five years using the MACRS 5-year schedule, which is the schedule that applies to heavy equipment.

In both cases, though, to offset active income with the purchases it has to be through an active business, meaning you have to meet one of the seven material participation tests. In most cases, the easiest way to meet that test is going to be spending at least 100 hours per year on the business operations and being the individual who spends more time on it than anyone else.

No. As long as the other qualifications are met, and your LLC purchases the equipment and it’s actively used for business (i.e., rented out), you can claim the deduction.

The IRS requires that the equipment be purchased and placed into service before December 31st to qualify for that year’s deduction.

No. In fact, it usually makes more sense not to. Most of our clients finance 80–90% of the purchase price, making a 10–20% down payment and spreading the rest over time.

Loan terms vary but typically involve low down payments and fixed monthly payments. We work with trusted lenders to find financing that fits your situation.

That depends on how much you buy! Before closing on your purchase, you will be given a pro forma that shows how much your loan payment will be and how much you should expect in rental income.

Rental rates fluctuate, but demand for heavy equipment is high. There are ways, through our program, to mitigate the risk that your specific equipment has a lower-than-ordinary rental rate, either because of ordinary demand, seasonal fluctuations, or down time due to maintenance or repairs.

The rental yard handles all of that and has an interactive dashboard where you can see and participate in the management of your equipment.

As part of the program, you will pay a monthly fee to the rental yard that will cover all necessary repairs during the life of your rental contract. The exact numbers depend on the equipment purchased, and will be disclosed to you before you close on the purchase.

The rental contracts are typically for five years. At the end of the five years, there is a balloon payment due on the loan, so it’s built into the contract with the rental yard that they will purchase the equipment from you, which will give you enough money to pay off the loan and refund your down payment.

Yes. When you sell equipment that you have fully depreciated, the sale price is subject to ordinary income tax. See IRC § 1245. This, though, can be offset through a qualifying new equipment purchase.

The biggest appreciable risk is that your equipment doesn’t get rented. There are three reasons your equipment might not get rented:

1. Temporary periods of low rental rate due to seasonality, maintenance, or repairs.

2. The equipment gets destroyed and cannot be rented out; or

3. Macro-economic downturns that slow the economy enough that equipment is not getting rented nationwide.

We can mitigate the risk of the first by (1) purchasing equipment in different markets, so if you buy three pieces of equipment, they might be in South Carolina, Pennsylvania, and Arizona; and (2) pooling with other equipment purchasers and use a contract common among them all that spreads out the risk and makes measured, predictable payments possible.

We mitigate the risk of the second by purchasing insurance. All equipment is insured, so if destroyed, it can be replaced.

The third risk is one we can do little to mitigate. If you choose to participate in the program, you have to understand that macro-economic downturns could result in negative cash flow.

Schedule a consultation with us (it’s free!—in fact you won’t pay for anything unless you decide to move forward with the program and purchase equipment). We’d be happy to run the numbers for you and create a projection to determine whether this program might be a good fit for you.