Selling used machinery can be difficult as in a previous article exposed how just valuing it can be difficult. Even so, most machinery owners attempt to sell their machinery themselves first likely employing a machinery dealer to assist hopping to obtain the highest possible value. What they miss is all of the other costs, expenses and problems selling machinery directly creates, just a few of which are potential Capital Gains Taxes.

Capital Gains Taxes 

What is Capital Gains Tax? Capital gains tax is a tax applied to the profit made from selling assets like stocks, bonds, real estate, and other investments like machinery. When you sell an asset for more than what you originally paid for it, the difference between the selling price and the initial cost is considered a capital gain. This gain is taxable, and the tax rate depends on several factors, such as how long the asset was held and the taxpayer’s income level. In some states, capital gains tax is enforced at both state and federal levels. While the federal government has its own capital gains tax rates, your state may have specific rules and rates that taxpayers must follow. Understanding these state-specific regulations is crucial for accurately calculating and reporting your capital gains tax obligations.

When you "Trade-In" your excess, depreciated and used equipment you remove the "Sale" and thereby eliminate the capital gains tax (Note Capital gains taxes may not apply to every state so please review your states tax laws carefully).

Lower Purchase Taxes

When buying new equipment, it often incurs sales taxes, which can vary by state. Even if you lease the machinery, taxes are applied to the payment based on the initial purchase price. To further reduce taxes, you can use your old equipment as a trade-in for new machinery. If your new equipment dealer doesn't offer a trade-in program, companies like Southern Fabricating Machinery Sales can assist with the process, seamlessly converting your used machinery into a down payment for the new equipment.

Eliminate The Down Time

In many cases new equipment is simply upgrading the older machinery on your floor providing better speed, a safer operating environment or imply overall better productivity. In cases such as these it's imperative to keep your machinery running and in place as long as possible until the new machinery is ready to be installed thereby limiting the downtime and loss of productivity.  Again by working with a company like Southern Fabricating Machinery Sales your downtime can be drastically reduced or eliminated entirely during upgrades. 

Save Rigging Expenses

Rigging is one of the necessary expenses we must endure in manufacturing. The costly process of using specialized equipment o move machinery in and out or around our facilities. Employing a rigger in your facility for just one occasion, removing the old machinery and installing the new can drastically save rigging expenses and eliminates the need to call the riggers back out to move and re-moving machinery around and then eventually load it on a buyer's truck.

Eliminate Potential Equipment Failures

When your selling older machinery you often are doing so because it is not as reliable or serviceable as new piece of equipment. When you trade-in a machine you eliminate the potential for the machinery to fail while on your floor awaiting a buyer thereby potentially eliminating costly repairs on excess equipment. 

No Tire Kickers, Looky Loos or Discount Dealers

Tire Kickers

When you advertise equipment for sale yourself you get the whole gamut of parties entertained by your offering. You will get the budgeter's that might say something like 'We're not really buying right now, but just looking to see what's available'. However what the really are doing is prodding you to see how desperate you are to sell. Are you willing to ship it to them free? Throw in all that tooling? Take half off for cash? These buyer's can tax your limits. 

Looky Loos 

Often you will get people wanting to stop in to see the machinery (or more likely your facility, employees  and customers work). These are typically people that never had any intention to buy but used your "for sale" machine as an excuse to get in your plant to learn more about how you do what you do. Trading in your machinery eliminates the opportunity for these characters to operate at your facility.

Discount Dealers

Lastly is the ever loving Discount Dealer scraping the internet for "For Sale By Owner" Postings hoping to find someone at the end of their ropes with trying to sell their machine directly and ready to take a deal, any deal offered. These guys are looking to capitalize on your exasperation in selling and somehow worming their way into offering it for sale at a lower price to make a quick buck. 

In summary when you trade in your machinery you;

  • Potentially eliminate the Capital Gains Tax
  • Lower your applicable Sales Taxes
  • Eliminate Down Time
  • Save on Rigging By Moving once
  • Eliminate the potential for costly repairs
  • Protect your plant, employees and clients security

If your new machinery dealer doesn't accept trade-ins, ask them why? Why with all these benefits, to you the buyer, why wouldn't they? If they simply don't know how send them over to the team at Southern Fabricating Machinery Sales where we can make it easy to turn your old iron into new machinery. 

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