All Forum Posts by: Joel Oh

this would be a great question for a cpa who really specializes in real estate investing or small business! i feel like your cpa should have been able to provide you with better information than that on how to use this potential deduction properly. i use @beachwoodbuyshouses on IG and she's insanely knowledgeable on how things like this can work for each individual!

 That's smart thinking. Better yet, get a vehicle that holds value insanely well. Toyota 4 Runner or in my case a Jeep Wrangler. The last one I just traded in and the value was just about what I had paid for it 5 years prior...

Definitely up to you and your CPA what you claim as business purpose.  However I successfully wrote off 2 vehicles  using Sec 179

So lets say I have $100k cash. Do I want to buy a Porsche Taycan that will be worth about $40k in five years or buy a $25k car (assuming I need a car). Then I take that $75k left over and buy a $300k property with it the provides me cash flow and in five years may be worth $330k and the car would still be worth $15k.

Thats why.

Your tax advisor is spot on—writing off a luxury car for your short-term rental (STR) demands solid proof of business usage; slapping a logo on the side won't cut it.The IRS lays down strict guidelines: the car must be regularly and exclusively used for business, excluding occasional STR trips or grocery runs. Even if you meet these requirements, depreciation deductions for luxury cars have limits, requiring fancy calculations and potentially resulting in tax hits. Consider the simpler option of the standard mileage deduction—a fixed rate per mile for business purposes, regardless of the car's value. Be wary of overly creative write-off strategies, as the IRS isn't easily fooled, risking audits and hefty penalties. Trust your tax advisor's guidance! Consider alternatives like renting a car solely for business use, leasing a car with business-friendly terms (consult your tax advisor for details), and focusing on maximizing deductions for legitimate business expenses such as property taxes, maintenance, and cleaning supplies.

 Ha! Saw one for the first time in real life this weekend. They look SICK! 

Might want to wait on going through with your plan until the new bonus depreciation law gets decided on. It will determine if you can write off 60% of your vehicle or 100%. Please keep in mind this is for vehicles over 6k pounds. 

A good way to “prove this car was used for the business” you can highlight activities like cleaning, restocking, and routine maintenance, which you handle personally. Ensure that the vehicle is used at least 51% of the time for tasks related to your luxury car, such as transporting cleaning supplies, bedding, and tools. Maintaining detailed records of mileage, receipts, and other relevant documentation is crucial, and your CPA can provide specific guidance on this. If you can justify the travel for business purposes, especially if you manage multiple short-term rentals, it will support your claim. If proving business use is challenging, consider using your personal car for these activities and logging the miles to claim deductions. 

 Why get a luxury car? What value will it add to your business? Cars are a depreciating asset. Go with what works.