MONEY!!! The Taxman Giveth….

Money!As the resident lawyer, I have to get used to people not always rarely taking my advice.  But sometimes I get a little uppity and feel the need to prove a point.

Today’s lesson is for my disbelieving finance colleague here at SMB Matters, and is something that is actually going to be worth MONEY to him, even though he didn’t trust what I told him about the not-so-mythical “SUV Tax Deduction”. 

Ever wonder why people still buy large SUVs, or why so many are sold at the end of the year?  Read on…

The SUV Deduction is an example of one tax goodie that the big, wealthy people lobbied to get into the tax code, which happens to benefit for “ordinary” people as well.  The SUV Tax Deduction is a form of accelerated depreciation, which allows qualifying taxpayers to deduct a significant portion of a vehicle’s value from their annual federal income tax return in the early years of ownership, versus the usual 5 year depreciation window applicable to most vehicles used primarily for business.

I won’t bore you with all of the nuances and caveats (e.g., the vehicle’s use must still be primarily for business purposes; personal use will lower the deduction on a prorata basis; qualifying vehicles generally need to have truck/crossover chasses; etc…).  However, the quick takeaway is that certain “heavy” SUVs or crossovers with a gross weight rated at or above 6000lbs  (GVWR) are eligible for accelerated depreciation in the first year “placed in service” up to $25,000, as well as “bonus depreciation”, which also increases the early year deduction value.  Where applicable, these two elements can sometimes be the equivalent of enabling a taxpayer to deduct a huge portion of the vehicle’s value in year one.  Economists might call it an economic distortion.  SUV owners call it “MONEY!”

Richard, this is my gift to you… Check this link to reveal the GVWR of your new Audi Q7! http://autos.yahoo.com/audi/q7/2012/3-0t-premium-quattro/specifications.html (Hint: it’s nested in the Vehicle Capacity section. )

Remember me at Christmastime…  😉

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2 Responses to MONEY!!! The Taxman Giveth….

  1. jasondbusch says:

    The other secret here is that used SUVs qualify as well … a great perk! We largely wrote off our business “truck”, a BMW X5 that can smoke Richard’s Audi mind you, in a single year and managed to get almost $30K off the “new” price.

    • smbmatters says:

      I didn’t want to let that “secret” out in the original post, but I’m glad you brought it up. You know how people value ‘free’ legal advice. I get heat for being too verbose, so I was under pressure to leave out the various caveats, conditions, disclaimers and fun facts. But you are absolutely right on the used qualification as well. I frankly had to hold back, since people tend to believe your story less and less with each new perk you reveal. “It can’t be true! Must be some of that lawyer nonsense.”

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