Car cost 100% write off as 179 expnse

[Alik Levin]

Dear all,

I am readding NOLO's article referenced at the end about how new Tax Law changes 179 expensing.

Do I read it correctly that I can write off a car cost (new or used) 100% using 179 expensing?

My scenario:

- Me and my wife run our rentals ourselves, so it's a business, not investment.

- I buy a car this year that's used at least 50% for business purposes - rentals, showing as my wife is RE broker.

Please advise.

Thank you!

-Alik

https://www.nolo.com/legal-encyclopedia/section-17...

[Michael Plaks]

@Alik Levin

No, you're not really reading the article correctly, especially since it does not address business vehicles at all.

1. The fact that you run your rentals yourself does not necessarily qualify this as a business. There is more to it, mostly the size of your portfolio and the amount of work it requires.

2. Your wife's brokerage business is far easier to attach your vehicle to than your rentals, even if they do qualify as a business.

3. You can only deduct the business portion of the car. If your Volga ;) costs $40k and is used 60% for business, you can never deduct more than $24k, which is 60% of its cost.

4. There are two ways to deduct it: Section 179 or 100% bonus. The bonus is usually better.

5. In its first year, you're still limited to $18k, no matter which method you use. Just a quirk of the law for regular automobiles.

6. Consider buying a heavy (>6,000 lbs) SUV instead. You will be able to apply 100% bonus depreciation to its entire business portion, no matter how high it is.

7. Warning A: after taking this huge deduction the first year, you will only have a very small deduction from Year 2 forward. 60% of actual costs, like gas, insurance and maintenance. No more depreciation and no option to use mileage allowance.

8. Warning B: whenever you sell or trade-in this new car, you will have a taxable gain.