Work vehicles, depreciation. Tax experts step inside.

[TRBON8R]

I'm trying to fight off the itch to buy a new work truck sometime next year to replace my '00 Tacoma. I am self-employed and wonder about the tax implications/advantages of buying a new vehicle. I like to buy vehicles that are one or two years old, so I would probably be looking at a used '02 or '03. I could be wrong but isn't it 5 years to fully depreciate a vehicle that is used on the job? My truck only has 60k miles on it and it should go quite a while longer, but still I've got the itch for something different. I bought the Tacoma in January '00. Am I stuck with the Tacoma until January '05? Thanks.

 

[TRBON8R]

ttt

 

[John Larkin]

If you trade it in, then you will have to figure a new cost basis for the replacement vehicle (orig price of old vehicle - depreciation taken + add'n cost for new vehicle). Read some IRS regulations online or stop by the post office and get a copy (I think you are talking about MACRS). There are formulas but it's simple math. A good accountant can help you better than me. The new schedule will start at the moment you buy the replacement vehicle so no, you aren't stuck. However, if you depreciate it to $0, when you sell it I'm fairly confident you have to report the sale price as income. If the applicable tax on that income equals or outweighs the current value of the vehicle at time of sale, you might be better off donating it to a lucky nephew or niece.

 

[Buick From Hell]

Ever thought of leasing? We've never depreciated a vehicle so I don't know of the differences...I just know the ENTIRE lease payment is deductible, minus something the IRS calls a "vehicle inclusion" (which is less than $200 on our 2002 F-250)

We've been leasing since '95, and it's actually pretty good...we've never paid a DIME for tires, brakes, batteries, nothing...in 8 years, oil changes have been the ONLY extra costs...make the payments, deduct them, get a new truck every 2 or 3 years...been working for us!

(the ONLY drawback is saving up a coupla grand for down payment)

Just another tidbit of info--we've been leasing FORDS, and NONE of them have EVER had to go to the shop except for oil changes...

 

[salvageV6]

I actually leased my WE4 car to a small business I worked for.

They got the write off and I got some extra money.

My boss who owned the company did it as well with his car, you need to keep records and all, and, the IRS may view it as an arms length transaction which ain't so good.

I'd consult a tax accountant for the best advice.

Paid most of my loan off during the first 2 years and then I stopped the lease thing.