Our favorite questions are always the ones that have us digging through a 200-page Internal Revenue Service document. Thanks! The IRS loophole you’re referring to allows business owners to deduct property — including vehicles used for business — on their taxes, called Section 179. There’s a loophole for certain sport utility vehicles that allows a deduction of up to $25,000. According to a 2006 IRS publication on Section 179, “This applies to any four-wheeled vehicle primarily designed or used to carry passengers over public streets, roads or highways that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight.”
We dug a little on this, and it looks like the deduction was initially created to help operating costs for farmers, giving them a way to write off vehicles purchased for work use and help stimulate the economy. So whether or not it’s ethical to use this loophole to buy a Cadillac Escalade with 22-inch wheels and a DVD rear-entertainment system for “business use” is entirely up to you, but the loophole exists.
The IRS publication also says the deduction can’t be applied to a vehicle if it seats more than nine people, has an open cargo area of at least six feet in interior length (think cargo van), and has no body section protruding more than 30 inches ahead of the leading edge of the windshield.
Rigs that qualify for this deduction include most full-size SUVs, like the Chevrolet Tahoe, Cadillac Escalade, BMW X5 and Toyota Sequoia. The IRS document doesn’t specify whether the SUV has to be truck- or car-based, but the truck-based SUVs are more likely to breach the 6,000-pound mark. You can find gross vehicle weight ratings in the Cars.com Side-by-Side Compare feature, and we’ve set up a comparison of the aforementioned SUVs here.
If you’re seriously interested in this tax write-off, be sure to contact your business’s accountant, local certified public accountant or tax attorney for more details, as they’ll have the most up-to- information available.
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There are very good reasons for this writeoff. 1st, the self-employed people who use this pay OVER 15% in SSI taxes each year, when those working for companies pay 7.5%. Also, every expense a self employed person encures is NOT paid for, like it is when a person works for a company. This also caused these people to buy more autos thus keeping the manufacturing of them going and keeping mfg costs down. Also, say a real eastate sales person has to have many total strangers in their autos on a regular basis, all the while depreciating the auto at an accelerated rate. I see it as a very positive tax writeoff under the circumstances. Or, just have every tax payer chip in some cash for the people who must use their cars in their business. I'll leave my address here where the checks can be sent. Lastly, independent contractors pay way too much in taxes anyway and usually more than pay for the minor tax relief in this writoff. Oh, and I am part of a company!
Our equipment and trucks last a maximum three years due to hard use on our family farm. Finally a law comes along that is fair and just allowing us to write-off our legitimate expenses within the equipments true lifespan. Then all you lawyers and so-called "professionals" come along and take advantage of the situation. Shame on you. I'm surprised with all your book learning how bad you must be in math. Had you done your math you would have figured out that, even with the deduction, the long term costs of ownership, i.e. maintenace, insurance, fuel costs etc., on a heavy vehicle makes for a poor financial decision on your part. I hope you think about this everyime you fill up now that gas is over $3/gal.
Does anyone know if this tax write off is available if you purchased the vehicle in a previous year and want to start taking the deduction this year?
Does the vehicle have to be purchased new?
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I don't know why people can write off an H1 for a realtor's office but my company's fleet of Topkicks aren't.
This is a weird loophole any way you slice it.