Does used equipment qualify for Section 179?

Section 179 covers both new and used equipment. Used machines, trucks and tools bought from a dealer, an auction or a private seller can qualify, as long as they meet the same rules as new equipment. For many small businesses, that makes used equipment one of the best-value purchases of the year.

The conditions

• The equipment must be “new to you”: you can’t have used it before, for example as a lessee who now buys it.
• It can’t be bought from a related party, such as a family member or a company you control.
• It must be used more than 50% for business.
• It must be placed in service by December 31 of the tax year.
• It must be tangible business property of a type that qualifies, which covers most machinery, vehicles and equipment.

Bonus depreciation on used equipment

Since the 2017 tax law, used property can also qualify for bonus depreciation if it meets similar “first use by you” and related-party rules. For property acquired after January 19, 2025, bonus depreciation is 100%, so used equipment above the Section 179 limit can often be fully deducted in the first year too.

Common situations

• Buying a used truck from a dealer: generally qualifies.
• Buying out equipment you were leasing: generally does not, because you already used it.
• Buying equipment from a business you or your family own: generally does not, under the related-party rules.
• Buying at auction: generally qualifies, with a bill of sale showing the price.

Financing used equipment

Used equipment is often a smart buy: lower cost, immediate availability and slower depreciation. Lenders finance it routinely, usually with terms that reflect the machine’s age and remaining life. Serialized equipment with a clear title and an inspection or maintenance history is easiest to finance.

Financing doesn’t change the tax treatment: equipment bought with an equipment finance agreement or a $1-buyout lease generally qualifies the same as a cash purchase.

Talk to your tax advisor about your purchase, and use our Section 179 calculator to estimate the effect. This article is general information, not tax advice.