Deductioning work vehicles/trailers?

[Sean Holland]

I already have a primary vehicle. I want to purchase a secondary work truck (20k) and dump trailer (7k). Trying to figure out how much of these purchases I can deduct. Also, what other deductions would that cut into (I assume there's a cap).

Oh yeah, my income this year will prob be around 150-170 from the capital gains of a house, if that helps.

[Michael Plaks]

@Sean Holland

Need more information, so will have to make assumptions.

First assumption: you're trying to flip houses. Profit from flipping houses is not called capital gains, by the way.

Second assumption: you expect to make $150k on a particular house you're working on right now. Congrats if so, but I doubt you calculate it correctly. You might be thinking that if you bought for $100k and sold for $250k - you made $150k. In reality, you need to subtract rehab costs, closing costs, funding costs, holding costs etc. 

Third assumption: you will be using the work truck exclusively for your rehab projects.

Then, if you really made a substantial net (meaning - after all expenses, including marketing and overhead) income - you should be able to deduct the entire cost of the truck and the trailer, plus the costs of operating it: gas, insurance, maintenance and such.

But since my assumptions could be wrong, and there're other factors we have not considered, my answer is tentative. It could be incorrect when everything else is considered.

Also, in case there is confusion, writing off something on taxes does not make it free. It merely provides a discount. And, if you later sell it, you will have taxable income from the sale.