Has anyone used the section 179 tax law write off with a purchased or leased car? I’m trying to figure out how it works. Apparently cars over 6000lbs aka G wagons are eligible for thus which allows the total price of the car to be written off the first year instead of over time with depreciation. Seems like it would be a good way to get cars for less than usual. Also is you sell the car the following year then what happens? Sorry just wondering if anyone has done this before. Btw I don’t currently own a business would open one If this made sense. Thanks in advance
You may have to explain to the IRS why your landscaping (for example) business requires a $165k G wagon.
Could I explain to them I use it as a car rental business for the site Turo? And actually use the site. I always knew that wealthy people
Bought the G wagons for some type of tax advantage other than the fact it’s a status symbol to own one. It all makes sense now. I’m sure there are dif ways to explain why you use the g wagon for business. And also could I buy a used one for like 70 and the. Use that also? Lol just curious
Talk to your personal tax advisor.
Yea was going to call tomorrow. Was just curious if anyone has used this before. After recently discovering this I wasn’t sure how well known it was.
Two words, income recapture. My neighbor purchased such a car under his engineering business, only reason was he plans to own it till the wheels fall off or it’s mechanically totaled. Makes sense in that equation. Reason why tons of these cars sell to business owners in Q4 of the year as a deduction.
And chances are rates will be higher if and when you sell in a future year…
Personal income tax rates.
Yeah… I need more deductions. Making more than I thought I would at my age.
The taxation rate of the income recapture from selling your car.
Have some kids
I’m still technically a dependent. LOL.
Most lease contracts don’t allow you to turo anyway (ya, bmw has a different contract for subletting)
I would purchase a used G wagon.
You claim the sales price as income and pay taxes on it.
I figured the car would depreciate over the course of the year so tech I wouldn’t make a profit off of it when I sold it for less the following year. They hold their value pretty good once a few years old so just figured it would be a decent idea.
When you write off/depreciate an asset, then turn around and sell it, the tax benefit of that write off is then “recaptured” as ordinary income to you on sale. So @leasecompanion 's point is this only makes sense if you are holding onto it long term, otherwise you are just reducing taxes in year 1 to pay them in year 2, when there could be a rate increase.
If you claim 179 accelerated depreciation and the sell the car the next year, you have to claim the entire sales price as profit.
179 doesn’t let you claim any more money than normal, it just let’s you front load it in year 1.
Thank you that makes sense.
Thank you this helps.