Tax Benefits of Buying Brewery Equipment Through Auctions

 

Tax Benefits of Buying Brewery Equipment Through Auctions

When it comes to expanding or modernizing your brewery, every dollar counts. The cost of brewing tanks, fermenters, bottling lines, and other specialized tools can be overwhelming, especially for smaller breweries or startups. That’s why many owners are turning to a brewery equipment auction as a smart way to source quality equipment at lower prices. Beyond the obvious savings at the auction itself, there’s another layer of advantage worth exploring—tax benefits. Understanding how the tax code treats equipment purchases could significantly boost your bottom line.

Immediate Expense Deductions  

One of the biggest advantages of purchasing brewery equipment through auctions is the ability to deduct the cost quickly. Thanks to tax provisions such as Section 179 in the U.S., businesses can deduct the full purchase price of qualifying equipment in the year it’s put into use, rather than spreading out depreciation over several years.

For breweries, this means that if you buy a fermenter or keg washer at auction and put it to work immediately, you may be able to write off the full cost that same tax year. This speeds up your ability to recoup expenses, creating more cash flow for growth or other investments.

Depreciation Opportunities  

Not all equipment purchases can or should be written off in one year. Some brewery owners prefer to take advantage of accelerated depreciation methods, which allow equipment costs to be deducted over time. This can be especially helpful when planning long-term finances, as it creates tax benefits year after year.

Buying at auction doesn’t change your eligibility for depreciation. Whether it’s brand new or lightly used, as long as the equipment meets IRS guidelines, it can qualify. That means even a secondhand bottling line from an auction could continue giving financial relief through yearly deductions.

Sales Tax Savings  

Another often-overlooked benefit comes from potential sales tax exemptions. Depending on your state or local regulations, equipment purchased for manufacturing or production might be partially or fully exempt from sales tax. In some cases, auction purchases can qualify for these same exemptions.

For breweries, where margins can be tight, even small savings on tax add up. Before you participate in an auction, it’s worth consulting with your accountant or checking state guidelines to see what exemptions you may qualify for.

Leveraging Bonus Depreciation  

Recent tax reforms have made bonus depreciation a particularly attractive option for businesses investing in equipment. Currently, businesses may be eligible to deduct a large percentage (sometimes even up to 100%) of the cost of qualified equipment in the year it is purchased and put into service.

The beauty of auctions is that they often feature high-quality equipment that still qualifies under these rules. By combining bonus depreciation with the lower purchase price you typically get at auction, breweries can maximize their tax benefits while saving upfront.

Lower Purchase Price, Same Tax Perks  

A common misconception is that tax benefits somehow shrink if the purchase price is lower. In reality, the tax treatment of equipment bought at auction is generally the same as new equipment bought from a dealer. The difference is you’re getting those deductions and depreciation opportunities on an item that cost you far less.

For example, if a brand-new fermenter costs $20,000 and you secure the same model in good condition at an auction for $8,000, you’re still entitled to depreciation or Section 179 benefits. That’s a major win—you save on the purchase price while still taking advantage of the same tax relief.

Recordkeeping Is Key  

To fully enjoy these benefits, breweries need to keep detailed records. Auction purchases often move quickly, and sometimes paperwork can be less formal than when buying from a traditional supplier. Be sure to retain invoices, payment records, and any documentation that proves when the equipment was put into service.

Your accountant will thank you at tax time, and you’ll avoid headaches if the IRS ever comes knocking. Clear records help ensure you claim every deduction you’re entitled to.

Strategic Planning with Auctions  

Auctions aren’t just about snagging a deal. They can also be a strategic tool for tax planning. If you know your brewery will have a profitable year and you’re looking for deductions, scheduling purchases at the right time through an auction can help reduce taxable income. On the other hand, if a slow year is ahead, you might choose to spread deductions out with depreciation.

By aligning auction purchases with your broader financial strategy, you can balance savings today with stability for tomorrow.

Final Thoughts  

Tax advantages are often an overlooked benefit of buying through a brewery equipment auction, but they can make a real difference in your financial planning. From immediate write-offs and depreciation to potential sales tax exemptions, the opportunities are there for breweries willing to do a little homework.

The combination of lower purchase prices and favorable tax treatment makes auctions more than just a way to cut costs—they’re a pathway to smarter financial growth. If you’re weighing your options, remember to involve your accountant early, plan purchases strategically, and keep records organized.

Want to go deeper into the financial advantages? Check out our guide on Maximizing ROI from Brewery Equipment Bought at Auction to see how breweries are turning smart purchases into long-term profitability.