06/ 03/ 2008
The expensing and deducting of vehicles include a number of special rules, so it's important to keep a few things in mind when purchasing a vehicle for business use.
First, if the vehicle is mixed used (meaning both business and personal), you need to know how much the vehicle is being used for each. You can't claim a Section 179 expensing deduction unless the vehicle is used at least 51 percent for business. If you use the vehicle for less than that, you may still claim a deduction using depreciation. Also, you may claim only a deduction equal to the percent of the use of the vehicle. (If you use the vehicle 75 percent for business, you multiply your maximum deduction by 0.75 to determine your allowable deduction.)
Second, there are also limits, depending on the kind of vehicle you purchase. Each year the IRS sets a limit for the deduction of a passenger vehicle. For SUVs and trucks, which are defined based on a specific gross weight, you can't claim more than $25,000. For specialized vehicles, you may be able to deduct even more.
Before taking any deduction related to the purchase of a vehicle, consult a qualified tax preparer to ensure that you follow the rules, while still claiming the maximum amount of your allowable deduction.
