Section 179 considerations for dental practices

Robert H. Gregg II, DDS

Yes, what you’ve heard is true: you may be able to save a third—33%—on the cost of a capital equipment investment by taking advantage of the Section 179 tax deduction. Now, if you’re like most dentists, you’re probably being besieged with marketing communications that encourage you to make your Section 179 purchase by the end of the year. But what part of the promised savings is true, and what part is hype?

Here are the basics: Section 179 of the Internal Revenue Code is a section of the tax law designed to encourage business owners to invest in equipment and technology. Section 179 allows businesses—such as dental practices—to deduct the full price of qualifying equipment purchased or financed during the tax year, up to $500,000, from gross income. Section 179 gives business owners a choice: apply full depreciation for the equipment purchase in the first year, or spread it out over five years.

If your practice has purchased, financed, or leased less than $2 million in new or used equipment during the previous tax year, then you may qualify for Section 179.

It sounds easy, right? Just purchase equipment and hand off the receipt to your dental accountant . . . Well, that’s only part of what you need to know. Before you decide whether you can afford that new technology you want, here are a few things you should consider.

Assess the investment potential

Every technology purchase should start with an honest assessment. Ask yourself these questions:

• Why do you want the technology?
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• Will it affect the way you treat patients?
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• Will your patients benefit? If so, how?
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• Will it add a new revenue stream?
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• Will it pay for itself?
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Answering these questions helps to cut though the marketing hype. It also helps you determine if a certain technology or equipment purchase will bring an actual benefit to your practice. Regardless of the equipment cost or promised savings, understanding the value the technology brings to your practice, patients, and bottom line will help you prioritize your investments.