Loophole In Tax Code Means Big Tax Breaks For SUV Buyers

In typical incompetent fashion, this reporter implies that SUVs receive huge tax credits, making the cost to purchase almost zero. As I have been pointing out since this law was enacted in 1984, there is a very lucrative extra deduction for vehicles weighing over 6,000 pounds; but the actual taxes saved are based on your tax brackets. I have always advised against buying new vehicles just for their tax deductions. However, when already in the market for a new (to you) vehicle, the extra deductions for a heavier one may be the deciding point.

Since I last commented on this issue, I have received some questions as to whether or not the vehicle has to be brand new to qualify for the lucrative Section 179 expensing election. The vehicle only needs to be new to you to qualify for the Section 179, as long as you buy it from an unrelated party. This gives you the best of both worlds, if you buy a one or two year old truck or SUV. The bulk of the real world depreciation is gone and you can deduct up to $24,000 of the cost immediately.

If you buy it from a close relative or a corporation you own, IRS will treat that as churning and force you to continue the depreciation schedule that had been used by the previous owner.

KMK

Labels: 179

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 1/08/2003 03:34:00 PM Send this post: