This is part of a series of blog posts about starting your own dog daycare or boarding business
Click here for the entire series

Kennels are categorized as equipment.

If you are starting a dog daycare of boarding company, there are a lot of up-front expenses that you have to pay attention to. The kennels themselves are probably one of the biggest (if not the biggest) single expense. This means you not only want to do your homework and research the kennels that will work best for your situation and last the longest - but you will also want to know what money-savings you might qualify for.

Luckily, the IRS considers the kennels a capital invesment (since you will be using the kennels to make money).  The IRS classifies the kennels as equipment (since you will be using the kennels to make money - much like a piece of machinery to a machine-shop). This has HUGE tax implications! The biggest benefit from this designation is that the cost of the kennels qualifies for Section 179!

What is Section 179?

Internal Revenue Code Section 179 allows businesses to expense the full purchase price of qualifying equipment and/or software purchased during the tax year. When you buy a piece of qualifying equipment (such as the kennels), you may be able to deduct the full purchase price on your business income tax return!

This means you can offset your tax burden by the full cost of the kennels!

Additional Bonus

On top of the 100% tax deduction, for the next couple years there is a Bonus Depreciation! This bonus depreciation allows business taxpayers to deduct additional depreciation for the cost of qualifying business property, beyond normal depreciation allowances. It’s intended to spur capital purchases by all business taxpayers, small, mid-sized and large. The bonus Depreciation is temporary and will phase out completely by 2027.

The timeline looks like this:
•  60% for tax year 2024
•  40% for tax year 2025
•  20% for tax year 2026
• 0% for 2027 and beyond.

This means if you plan on opening a dog daycare, boarding, vet clinic, or any other business that uses kennels as the primary way to make money, now is the best time to get started!  Take advantage of the tax deductions - including the bonus deduction!

Talk to your CPA to determine the best leverage of the rules and what will work best for your unique situation.