Can I write off the purchase of a vehicle for tax purposes?

[Amy Raye Rogers]

I'm considering purchasing a vehicle to do showings as an agent.  Can that purchase be deducted? Is it better to create a depreciation schedule for it?  CPA friends, help!

[Ashish Acharya]

Originally posted by @Amy Raye Rogers:

I'm considering purchasing a vehicle to do showings as an agent.  Can that purchase be deducted? Is it better to create a depreciation schedule for it?  CPA friends, help!

 Yes, absolutely. This question is simple but has many rules. Please talk to you CPA. 

Cars are subject to more restrictive tax depreciation rules than those that apply to other depreciable assets. Under so-called “luxury auto” rules, depreciation deductions are artificially “capped.”

Because of the restrictions for cars, you may be better off from a tax timing perspective if you replace your business car with a heavy sport utility vehicle (SUV) instead of another car. That's because the caps on annual depreciation and expensing deductions for passenger automobiles don't apply to trucks or vans (and that includes SUVs) that are rated at more than 6,000 pounds gross (loaded) vehicle weight.

• SUV’s with an UNLOADED gross vehicle weight greater than 6,000 pounds but less than 14,000 pounds are allowed to claim a Section 179 expense of up to $26,200.
• Trucks with an interior bed-length of six feet or more are NOT subject to this $26,200 limit.
• Trucks over 6,000 pounds UNLOADED gross vehicle weight with beds shorter than six feet are considered SUVs and subject to the $26,200 limit.
• Trucks, vans, and SUVs with a LOADED gross vehicle weight of over 6,000 pounds are NOT subject to the Section 280F limits. These assets qualify for 100% bonus depreciation as well as regular depreciation and section 179 expense rules. This deduction will be prorated for business use percentage and if business use goes below 50% there will be recapture of the deduction taken.