Hello all, last time I met with my accountant, she mentioned if I buy a truck (currently own a small car) that I could write it off as a real estate expense as that is what I will be using it for often. Is this accurate? If so, will it make much of a difference come tax time? She mentioned I should buy another property as she said I really need a write off. I don't agree with buying in this market and overpaying for a property (my market is well overpriced). So getting back to the original question, if I were to buy a truck, can I use that as my major tax write off since using it for my rental properties? My accountant does not return my emails or anything as for particulars as to how much it will help. Yes I'm considering switching accountants but afraid of change sometimes. Thanks!
You cannot write off 100% if used for any other purpose. I prefer reimbursing myself for business mileage instead.
Pick up a Ford F350 diesel dually , 4x4 and get the Platinum Package . it will set you back around $ 79,000 . But its a cool truck
@Tom K. You really need to research Section 179 and speak with your accountant to make sure its something your business qualifies for. Some businesses are better off leasing, some buying. Every situation is different, if you do decide to buy a "truck", research it because there are limits, and I can tell you that you're probably better off buying a heavier SUV or Cargo truck, as the limits go up. Also, sometimes even if your financing the purchase, you can write the entire purchase price off the year of purchase, which could be great in a year that you need a good write off. Again there's limits.
If you're fulltime in real estate investing, or any small business for that matter, learning to take advantage of all the possible tax deductions that you can legally use, will help you succeed. Section 179 is one of the best tax laws for small businesses, I am amazed more people do not know about it.
Thanks guys! I will Def check out section 179! Have a great one!!
I also agree that you should not overspend for a house that doesn't provide income. Lease the house low instead and sublet it to others in a market as you described.
Consider traditional IRA, health savings accounts, SEP IRA, SIMPLE IRA and 401k to lower tax liability if you are not using some of them now.
Get a new CPA who can help you. For many people, getting reimbursed your business mileage is often the best approach. There are multiple ways of structuring your use of the truck from a tax perspective. You want to choose the approach that best fits your needs.
So one couldnt claim both mileage and truck purchase write off?
If the 179 deduction is what your accountant had in mind, remember that the 179 deduction cannot push you into a loss scenario.
For example, if you are using this in your rental property and you are already in a loss scenario due to depreciation, then buying a vehicle and trying to take a 179 deduction gets you nothing.
If you've got a small profit in your rental, then the 179 can only take you down to $0 profit, so this might be marginally helpful. But buying a vehicle for tens of thousands of dollars just to get a tax write off is pretty silly if you don't really need it.
Buying a depreciating asset that you don't really need is a pretty silly way to go, just to get the write off. In the same way you won't consider buying another rental in your market because it doesn't make sense, you should look at this truck in the same way.
Any transaction you engage in "just" for the write off should really be reconsidered. Instead, figure out what it takes to manage your business in the best way possible, then look to work those decisions in the most tax advantageous way possible.
Use truck % of time or actual mileage used for your business. Suggest you buy a truck or lease a car.
@Tom K. Purchasing a truck for a rental is most unlikely a red flag. If you visit the property 10x a year and your property is 5 miles away, you can deduct 100 miles, that means you can deduct $50 or something. Unless you go around and look for properties, then that too is deductible in mileage. If you are in audit, irs will ask you, for sure you will need to go to get grocery for your home, or pickup the kids, without your small car, what are you using? Remember that full deduction is only applicable if it is used 100% and solely for the business, other than that, it is prorated. If don’t go per mile route, and you drive 10,000 miles, and only 100 miles is for the rental property visit, and you spend $10,000 for dp, fuel, oils, maintenance, then technically you are allowed a $100 deduction, outside of depreciation, which is not really much. I find it ridiculous to use per mile on a brand new car. Change your accountant.
All feedback has been great and appreciated...let me supply the most likely scenario so you get a better idea:
I own three properties. My current car is 17 years old and I'd like to get a new car or truck. Leaning toward the truck so I can bring ladder, tools equip to current and future rental properties. Looking to spend approximately 10-12,000 on the vehicle. Figured buying the truck would actually save me a good chunk of $ because I can write it off. Your probably wondering what my tax situation will be if I don't purchase a truck? I will owe approximately $3500 come tax time. I dont NEED the truck necessarily, I can always pay $23 to use home depots etc if I need one. But wouldn't it make more sense to buy a truck vs. car for tax purposes? For example
Scenerio #1: buy car and save on gas buy still owe $3500 come tax time.
Sceneries #2: buy used truck for approx 10k- 12k and owe little to nothing come tax time. That's like getting the truck for 8k instead of buying price of 11k, correct?
Get the truck anyway , I cant imagine not having one , got my first pick up at 17 years old . I am 55 and always have had a pickup
I purchased a truck through my business and was able to write it off. If the truck is over a certain gvw, you are able to write off the entire purchase amount also. An accountant should be able to give you the specifics, but the long and short of it is yes if it is done properly
Thanks Brandon but I think your situation is different in that I don't have an Llc or business per say so I can't go that route but thanks.
I am not certain you are able to claim a 179 expense when dealing with a rental business.
If you do flipping/wholesaling - you may be able to utilize section 179 expense.
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