Write Off Your New Car Used For Business Purposes

Like any areas of tax law, vehicle write offs can unfortunately be a little complex. Here, we'll provide a quick run through to explain when new vehicles qualify for deductions and how much you can expect to expense.

Many people will be quit confused with lot of questions about tax deductions for vehicle purchases. Can I write off my new car? Does it make sense to purchase a vehicle now before the end of the year? Can I deduct the full amount?

When can you deduct new vehicle as a business expense?

Did you know that if you buy a vehicle with a Gross Vehicle Weight Rating (GVWR) over 6000 pounds you can deduct your vehicle (or part of your vehicle) as a business expense if it's used mostly for your business. Seems pretty simple, but exactly how much you can write off varies depending on the type of vehicle and its use. If you purchase a business vehicle that by its nature is not suited for personal travel (ambulance, hearse, cargo vehicles without seats, taxis, vehicles with seats for over nine passengers), you can generally write off the whole thing. This doesn't mean you can purchase a hearse, claim the full expense, and then use it as your personal vehicle. Personal use will still trump the kind of vehicle you purchase.

For passenger vehicles, trucks, and vans not meeting the guidelines that are used more than 50% in a qualified business use, the total deduction for depreciation including both the Section 179 expense deduction as well as Bonus Depreciation is limited for trucks and vans, you're able to claim a portion of your expenses the year it was purchased and made available for use.

  • Cars – up to $3,160 for regular depreciation
  • Trucks and vans – up to $3,460 for regular depreciation

Under Section 179 of the tax law, there's a specific depreciation break for certain passenger vehicles with a gross weight between 6,000 and 14,000 lbs. If these vehicles are financed and meet proper conditions, you can qualify for expensing up to $25,000 the first year. Regular depreciation can also be taken depending on the cost of the vehicle. Here's a list of vehicles that qualify under section 179, although this list is not exhaustive:
  • Audi: Q7 TDI
  • BMW: X5, X6
  • Buick: Enclave
  • Cadillac: Escalade
  • Chevy: Silverado, Suburban, Tahoe, and Traverse
  • Dodge: Durango and Ram pickup
  • Ford: Expedition, Explorer, all F-Series pickups, Transit vans
  • GMC: Acadia, Yukon, all Sierra pickups
  • Infiniti: QX56
  • Jeep: Grand Cherokee
  • Land Rover: LR4, HSE, Sport
  • Lincoln: MKT, Navigator
  • Mercedes: GL 350 diesel, ML350, R350
  • Nissan: Armada NV, Pathfinder 4-wheel drive, Titan
  • VW: Touareg hybrid

In past years, there's been an opportunity for additional deductions through bonus depreciation. Bonus depreciation for 2016 is not yet available, but this could change before the end of the year.

If you have specific questions, talk to a qualified tax professional. Our team is available for any further assistancefeel free to contact us at bop@aotax.com or Phone: 703-584-5533 Ext: 255 & 314 we will be very happy to assist you.