Tax With Equipment Loan 2026: Double Tax Benefits
How equipment loans provide double tax benefits in 2026. Capital allowance plus interest deduction with 0% down payment.
Double Tax Benefits Explained
Equipment financing gives you two tax deductions. First, capital allowance on the equipment. Second, interest deduction on the loan. Double benefits mean double savings.
Benefit #1: Capital Allowance
Deduct the equipment cost over time:
- Year 1 initial allowance: 40% of equipment cost
- Years 2-5 annual allowance: 20% of remaining value
- Total deductions: Up to 75%+ over 5 years
Example: RM100,000 Excavator
β’ Year 1: RM40,000 deduction
β’ Years 2-5: RM35,424 deduction
Total capital allowance: RM75,424
Benefit #2: Interest Deduction
Deduct all interest paid on the loan:
- Interest is 100% deductible: Every ringgit paid
- Claim each year: As you make payments
- Additional savings: On top of capital allowance
Example: RM100,000 Loan at 6% for 5 Years
β’ Total interest: ~RM30,000
β’ Annual interest: ~RM6,000
Total interest deduction: RM30,000
Combined Tax Savings
| Deduction Type | Amount |
|---|---|
| Capital Allowance | RM75,424 |
| Interest Deduction | RM30,000 |
| Total Deductions | RM105,424 |
Equipment Cost: RM100,000
Total Deductions: RM105,424 (more than cost!)
Tax Savings at 24%: ~RM25,300
Bank vs. Ing Heng: Comparison
| Factor | Bank | Ing Heng Credit |
|---|---|---|
| Down Payment | 10-20% | 0% |
| Loan Amount | 90% max | 100% |
| Interest Deduction | Lower (smaller loan) | Higher (full loan) |
| Capital Allowance | Same | Same |
Why 100% Loan Means More Tax Savings
Example: RM120,000 Excavator
Bank Financing (10% down):
β’ Down payment: RM12,000
β’ Loan amount: RM108,000
β’ Interest over 5 years: ~RM32,400
β’ Capital allowance: RM90,509
β’ Total deductions: RM122,909
Ing Heng (0% down):
β’ Down payment: RM0
β’ Loan amount: RM120,000
β’ Interest over 5 years: ~RM36,000
β’ Capital allowance: RM90,509
β’ Total deductions: RM126,509
Extra Tax Savings: ~RM3,600 from higher interest deduction
Interest Deduction Calculation
Track your interest deduction each year:
Year 1:
β’ Loan balance: RM120,000
β’ Interest portion: ~RM7,200
β’ Capital allowance: RM48,000
Total Year 1 deduction: RM55,200
Year 2:
β’ Interest portion: ~RM6,000
β’ Capital allowance: RM14,400
Total Year 2 deduction: RM20,400
Used Equipment Double Benefit
Used equipment also gets double benefits:
- Lower cost: RM50,000 used excavator
- Same capital allowance: 40% initial = RM20,000
- Same interest deduction: On loan amount
- Banks reject: Used equipment older than 5 years
- Ing Heng accepts: Any age equipment
Maximizing Your 2026 Tax Benefits
- Buy early in year: Maximize Year 1 deductions
- Use 0% down: Full loan = more interest deduction
- Finance full amount: 100% loan maximizes interest
- Consider used: Lower cost, faster full deduction
- Track everything: Document both deductions
Real Double Benefit Story
"Bought RM150,000 excavator with loan. Year 1 capital allowance: RM60,000. Year 1 interest: RM9,000. Total Year 1 deduction: RM69,000. Taxable income reduced by RM69,000. Saved RM16,560 in taxes Year 1 alone. Over 5 years, total deductions exceeded RM115,000. Equipment only cost RM150,000. Almost full cost recovered in tax deductions. Plus still own the equipment. 0% down payment meant no upfront cash. Best investment decision ever."
β Murali a/l Krishnan, Construction Owner
Get Double Tax Benefits in 2026
Equipment loans provide double tax savings. 0% down payment maximizes interest deduction. 100% full loan increases deductions. NO age limit on used equipment.
We approve in 24-48 hours. Start your double tax benefit journey today.
Double Your Tax Savings
Get 0% down payment equipment financing with capital allowance and interest double deductions.
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