Electric Car as a Business Expense

[Joe Splitrock]

We are in a situation where my wife is soon to be quitting her job to focus more on the rental business. My daughter will be getting her drivers license this year, so we will need to add a third car. We could probably get by with two cars, accept the rental properties mean we need a third car for situations where I am at work, my daughter is at school and something needs to be done at a rental property. We have been claiming mileage and put on about 2500 miles last year for rentals. We are looking to buy a new car that will be under 6000 pounds. We want to expense the new car against the rental business, but I have some questions and looking for advice. I understand I need to discuss with my CPA. I am just trying to get educated and multiple opinions:

1. New vehicle will be $60,000 but with $7500 federal tax credit for electric. What is the best method to depreciate and how does that work per year? Any bonus depreciation or good strategies here?

2. We will use the car for 60-75% business and the rest personal. Is it correct that I just prorate based on percentage use? Is that done with all expenses at the same ratio? How about if your split between business and personal changes every year, can you adjust each year or are you stuck into a set percentage?

3. If I finance versus pay cash, can I claim interest expense? 

4. Can I claim sales tax in the year I purchase? 

5. It is electric, so no gas bill to claim. I can claim expenses on billable chargers pretty easily, but how do I claim home electric use? Do I just calculate split based on KW charging hours and keep some records of my bills to substantiate?

6. Can I expense license plate/registration and insurance? 

7. Should the vehicle registration be in the business name or personal or does it not matter for tax purposes?

8. We drive 2500 per year for the business, so is that substantial enough to justify a car? Do I need to keep any type of mileage records similar to what I am keeping right now when claiming mileage deduction?

9. If we chose to continue claiming just mileage, are there other expenses I can still claim? Vehicle registration, insurance, sales tax, etc OR does mileage mean ALL expenses are part of that?

@Natalie Kolodij @Michael Plaks @Ashish Acharya  and any other BP tax experts, please share your advice.

[Jay Hinrichs]

answer from the cheap seats and someone who has written off their vehicle for work for the last 47 years  at least for me if you use milage that's all you need to do it encompasses all those items you list.

but I routinely drove 20 to 30k miles a year schlepping clients around and running up into the boonies to show rural acreages. 

so the itemized approach is probably what you want to do and keep a log book that you can pop out if your audited..  

As for the federal tax credit that is just what is says a 7500 off of your tax bill ..   and some states ( like Oregon also cut you a check we are getting 2500.00 for Lori's new model Y)  But Tesla I don't think qualifies anymore for the 7500.00 unless Biden gets his BBAB passed which is looking pretty unlikely from what I read on the news.  

As for writing off your charging at home..  If what ever vehicle you buy is like our Tesla's  you can pre set the time to start charging we set ours for 10pm because the electricity rate in our area drops from 12cents a kilowatt 4 cents and we usually fill up with 50 Kilowatts or 2.oo for a full fill up and 300 or so miles of range which is really 250 miles of range as you lose range based on driving habits and how cold it is and if your driving in mountainous areas. 

so at that point you should be able to just put a copy of your electric bill in your file and highlight the increased usage from 10pm till 2 to 4 am whcn you fully charged.. Now Tesla's charge fast not sure how fast other brands charge.. And the supercharger network is the envy of the every EV owner. 

The model X qualifies for the bonus depreciation that's what I drive.  And so will the cybertruck no doubt and when that comes in I will buy a new one of those and trade in my Y.. 


EV vehicles for your mission are perfect I bet you will really like it.