Can You Save a Ton of Money when Buying a 3-Ton SUV?
Purchasing a 6,000-pound SUV for your business at a cost of $50,000 or more might not seem like a great idea, especially when you can get by with a much smaller or less expensive vehicle for business purposes. However, you shouldn’t dismiss the idea out of hand. You may be keen on the prospect when you discover that you stand to enjoy an incredible tax write-off in the process.
Generally speaking, vehicles are going to suffer massive depreciation in the first year alone, and over the course of several years, you’re going to lose significant value on this major purchase. How can you recoup some of this cost? Through applicable tax deductions, of course, and surprisingly, certain tax codes give SUVs over 6,000 pounds the edge. Here’s what you need to know before purchasing a new company vehicle.
Section 168(K) and 179 of the Internal Revenue Code
The tax codes related to write-offs for business vehicles are complex, to say the least. However, sections 168(k) and 179 of the Internal Revenue Code detail how vehicles over 6,000 pounds can be written off for depreciation.
Owners can claim up to 100% in depreciation over the course of four years for qualifying vehicles. When compared with similarly-priced luxury cars that aren’t over 6,000 pounds, the write-off amounts to significantly less – somewhere around 35%.
There are caveats. The vehicle must be 100% business use, which means you can’t use it to pick up groceries and run the kids to soccer practice. In most cases, this is practically impossible. However, you can claim a percentage for business use, but if you want all your ducks in a row, you really need to keep a mileage log to back up your claim.
Suitable Vehicles by SUV Weight
You should know that there are several vehicles currently in production that fall under the tax write-off for SUVs over 6,000 pounds, including the Audi Q7, the Chevy Suburban, the Infiniti QX56 4WD, the Mercedes Benz G550, and the Toyota Tundra 4WD, among dozens of others. You should have no problem finding the truck or SUV that is right for your business.
Avoiding Red Flags
As with any business write-off, you have to make sure your tax write-off for SUVs doesn’t go over the line and raise red flags with the IRS, unless you’re keen to face an audit in the near future. What does this mean? If your small business only grosses about $50,000, writing off a $50,000+ vehicle, even over the course of four years, is sure to raise eyebrows and result in further investigation by the IRS. If, on the other hand, you run a million-dollar enterprise, you can probably get away with this purchase without inviting speculation.
Alternative Options for a Tax Write-Off for SUVs
Keep in mind, you don’t necessarily have to purchase a 6,000-pound vehicle to get a tax write-off. It’s just that this SUV weight class delivers the best deduction for depreciation, so if you’re even considering a high-cost car for your business, this is probably your best bet for savings.
Whether you’re a business owner seeking qualifying SUVs for your company car or you’re a dealer catering to business buyers, partnering with DealerStrip gives you the best opportunity to connect with other dealers and private parties to buy, sell, and trade suitable vehicles.