Deducting Vehicle and Expenses, Section 179

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Deducting Vehicle and Expenses, Section 179

Gary F.
Honolulu, HI · Member since 2015 · 214 posts · 49 votes

I'm a new investor looking to make my first venture into investing.  I'm starting to rent rooms in my private home to start.  I was researching deductions to offset my rental income. Section 179 is intriguing for vehicles.  For 2018 what I understand is we can deduct the business use portion on a new or used vehicle payments and expenses OR standard mileage.  Being that I'm just starting and dont have much income yet, if I were to purchase a car, like an SUV over 6000lbs per section 179, I might have more losses than income.  I read somewhere that this situation may be a red flag for IRS.  I'm assuming as long as you have all the required documents, that it shouldn't be an issue.

How many of you out there claim your vehicle?  Have you had any issues?

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Logan AllecBusiness Member
Accountant · Los Angeles, CA · Member since 2014 · 1k+ posts · 980 votes
8y

@Gary F. You can only take the Section 179 deduction on a vehicle used more than 50% for qualified business use.

There is also bonus depreciation.

However I would say that if you are renting out rooms I'm not sure how high your business % could really be for a vehicle?  Standard mileage may be your best bet.

Also if you are renting out rooms in a house in San Jose,  after depreciation, you may be in a tax loss anyway.  But of course I don't know your depreciable basis.

In terms of apps, check out MileIQ.

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  • Pat L.
    Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
    8y

    We have 179'd several trucks over the years. But you cannot create a loss with it.

    We then use the std mileage deduction as new vehicles have few actual expenses & after an audit I am very careful about documenting the 'business mileage'.

    This is a good site to familiarize yourself with the tax intricacies ...

    http://www.section179.org/

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  • Gary F.
    OP
    Honolulu, HI · Member since 2015 · 214 posts · 49 votes
    8y

    patl. Thanks for the reply. Yeah, I knew about not creating a loss, that we can only deduct up to the income amount, not negative.  So was your audit, if may ask, triggered by the vehicle deductions?  Any particular app or method you use to track your mileage?

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  • Logan AllecBusiness Member
    Accountant · Los Angeles, CA · Member since 2014 · 1k+ posts · 980 votes
    8y

    @Gary F. You can only take the Section 179 deduction on a vehicle used more than 50% for qualified business use.

    There is also bonus depreciation.

    However I would say that if you are renting out rooms I'm not sure how high your business % could really be for a vehicle?  Standard mileage may be your best bet.

    Also if you are renting out rooms in a house in San Jose,  after depreciation, you may be in a tax loss anyway.  But of course I don't know your depreciable basis.

    In terms of apps, check out MileIQ.

    Clarita CPA Group516 Reviews
    WebsiteView Page
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  • Carl FischerPro Member
    Rental Property Investor · Ambler, PA · Member since 2015 · 2k+ posts · 1k+ votes
    8y

    @Gary F.

    I’m not sure how much reasonable mileage you can deduct when renting out just rooms in your house. Seems like it could be a red flag. 

    [email protected]215-283-2868
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  • Pat L.
    Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
    8y

    We have a lot of properties & I detail mileage against individual properties. The audit was initiated because of a 3,500 mileage claim. During the audit I rearranged my mileage by property & the work done etc & it was deemed acceptable. I simply track mileage each day in a log. The truck is 100% business use as we own several other vehicles for personal use.

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  • Gary F.
    OP
    Honolulu, HI · Member since 2015 · 214 posts · 49 votes
    8y

    Excellent feedback.  Yeah, the mileage would be low for business use.  But I'm also looking into other ventures in Socal and possibly nearby states.  So miles would go up.  I'd just have to be sure at least 50% is for business.  Good points!!

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