Section 179 and SUV

3 Replies

Hello BP forum and thanks in advance for your expertise and insight into our question.

We have 2 rental properties, one of which is undergoing renovations with my wife as the project manager. We spend about 20 hrs/week between actively managing our properties and researching other RE opportunities.

My question is: Even though real estate generally doesn't qualify for a section 179 deduction, could we buy a qualifying SUV under section 179?

@Elisabeth Cooke You sure can, though keep in mind your deduction will be limited to taxable business income and you must meet the "use" requirements. 

Sometimes rental property owners are better off utilizing other methods, but Section 179 is certainly a great way to go if you can feasibly justify the purchase. 

As @Brandon Hall  pointed out the 179 is limited to your income in the business.  Most real estate investors get kicked into loses after depreciation, so you might not be able to use the deduction.  Also after you 179 a vehicle you can only take actual expenses, gas, oil changes ect. Further you may have to "recapture" a portion of the deduction when you sell the vehicle.  At 57.5 cents a mile the curent IRS rate this may be a better deal for you.

Hope this helps, good luck!

Thank you for the replles, Brandon and Cameron.  The information you have given about 179 and SUV's is very useful. 

Regarding the "recapture" during the sale of the Section 179 purchased vehicle, I read the vehicle could be gifted after a period of two years.  The person who receives the gifted vehicle could then sell it without the "recapture" component.  Is that true?