Research properties and their owners, compile lists, and more.
A multiple-listing service comparable tool.
List your properties with Propelio Realty for incredible savings.
If you have an underwater property, our experts can help.
A channel that gives daily updated archive of our live video.
Get to know Propelio better – explore our story and mission.
Shows MLS coverage and broker transactions in your state.
Share Propelio with friends and family to earn exciting rewards
Hey folks, Samir Bhatia here from BW Group. At our CPA firm, we specialize in small businesses and high-net-worth individuals, particularly physicians and those in real estate. Today, we’re diving into a hot topic—auto deductions. This is a question we get a lot, so let’s break it down.
When it comes to auto expenses, you only have two options: actual expenses or mileage. Whether you’re leasing or owning, you can either deduct the actual costs or use the mileage rate set by the IRS. Understanding which option to use can have significant implications for your deductions.
For 2018, the mileage rate was 54.5 cents per mile. So, if you drive 12,000 miles annually, you could deduct $6,500. Over ten years, that’s $65,000 if you drive until the wheels fall off. Mileage deduction is perfect for long-term car owners.
Once you choose mileage, you can’t switch to actual expenses for the same vehicle and vice versa.
With new bonus depreciation rules, you can write off much more upfront. For example, if you buy a $40,000 car, you can deduct $18,000 in the first year. This is ideal if you’ve had a particularly good year and need a large deduction.
Even if you only paid $4,000 towards your car in the year you bought it, you could still deduct up to $18,000 because you’re on the hook for the note.
If you plan to keep your car for a long time and want consistent deductions, buying is your best bet. For cars around $40,000, mileage usually makes more sense over the long haul. But for higher-priced vehicles, actual expenses could be more beneficial over the lifespan of the car.
If you’d rather switch cars every few years, leasing is the way to go. When leasing, you can write off your lease payments as rent expenses. However, keep in mind the IRS requires an “auto lease inclusion,” a small amount added back based on a formula they use.
For vehicles over 6,000 pounds, the rules get even better. Under the Section 179 depreciation and 100% bonus depreciation, you can write off the entire cost in the year you purchase it. For instance, buying a $90,000 truck allows you to deduct the full amount if you have the income to support it. This is a significant tax-saving strategy, especially if planned with your CPA.
Remember, commuting from your home to your primary office isn’t deductible. However, we can discuss ways to make your home office your primary office to maximize deductions.
Understanding your options for auto deductions can significantly impact your tax savings, especially for high-net-worth individuals and small business owners like physicians and real estate professionals. Whether you choose mileage or actual expenses, it’s crucial to assess your driving habits, vehicle type, and financial situation to make the most informed decision. For long-term vehicle ownership, mileage deductions might be more beneficial, whereas actual expenses could offer substantial upfront deductions, particularly with the new bonus depreciation rules.
Always consult with your CPA to tailor the best strategy for your unique circumstances, and leverage every possible deduction to optimize your tax position. At BW Group, we’re here to help you navigate these complexities and ensure you maximize your benefits.
Get started with Propelio and unlock all the tools you need to succeed in real estate. Sign up now for a 14-day FREE trial: Start Free Trial
Real estate investing isn’t just for adults. Smart teenagers can start building wealth...
Success in real estate can seem mysterious to newcomers. Some imagine it involves...
Starting a real estate business requires more than just finding great deals. Protecting...
Real estate investing comes with countless strategies, but few are as misunderstood—or as...
Success in real estate hinges on more than just buying and selling houses....
Owner financing is a fantastic tool for real estate investors who want to...
Owner financing can be a powerful way to invest in real estate, offering...
Real estate investing comes with its own language, filled with acronyms and terms...
Donovan Ruffin has quickly made a name for himself in real estate. Starting...
Not knowing how to estimate a rehab budget can feel overwhelming, especially with...
Do you love learning from your favorite hosts? Subscribe and we will notify you when we release new shows.
You will never be left on your own. Our live chat is watched like Fort Knox, and that’s why our median response time is under 3 minutes. Have a question? Send us a message in the chat bubble in the bottom right corner.
Services
Resources