Should You Lease or Buy Equipment for Your Practice?

Aug 25
2 min read

Updated: Aug 27

Upgrading your dental chairs, imaging equipment, scanners, or technology is essential for providing quality patient care. But when it comes to acquiring new equipment, many doctors and dentists are unsure whether leasing or buying is the smarter financial move. At ISTAXPro, we provide accurate bookkeeping and tax return preparation for doctors and dentists, ensuring your equipment decisions align with your cash flow, tax strategy, and long-term practice goals.

Leasing Equipment: Pros and Cons

Advantages of Leasing:

●Lower upfront costs, preserving cash flow

●Predictable monthly payments for budgeting

● Easier to upgrade to newer equipment at the end of the lease

●Potential to include maintenance and support in lease agreements

Disadvantages of Leasing:

● Higher total cost over the life of the lease

● No equity in the equipment at the end of the term

● Lease agreements may have restrictions on usage or upgrades

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Buying Equipment: Pros and Cons

Advantages of Buying:

●Full ownership and equity in your equipment

●Ability to keep using equipment as long as it remains functional

●Potential for lower overall cost compared to leasing

● Eligibility for tax deductions through Section 179 and bonus depreciation

Disadvantages of Buying:

● Higher upfront costs that can impact cash flow

● Responsible for all maintenance and repairsEquipment may become outdated over time

Tax Considerations When Buying Equipment

Purchasing equipment can provide significant tax benefits:

●Section 179 Deduction: Allows you to deduct the full purchase price of qualifying equipment in the year it is placed in service, up to the annual limit.

●Bonus Depreciation: Currently allows for 100 percent immediate expensing of new and used equipment purchases in the year placed in service.

●Depreciation Over Time: If Section 179 or bonus depreciation is not used, equipment can be depreciated over its useful life, spreading deductions over several years.

These deductions can significantly reduce your taxable income, making purchasing an attractive option if your practice is profitable.

Tax Considerations When Leasing Equipment

Lease payments are typically deductible as a business expense in the year they are paid, reducing your taxable income without the need to manage depreciation schedules.

For practices with tighter cash flow or those looking to preserve liquidity, leasing can provide ongoing deductions while avoiding large upfront expenditures.