Hi,
I'm not an expert, so please check this out with your accountant
before you actually buy. I can tell you that my husband and I
purchased a work vehicle last year to take advantage of the tax
incentive. Unfortunately, since October 2004, the deduction has been
limited to $25,000 (although there is a possiblity of "bonus"
depreciation which can effectively increase this amount.) In our
case, we were able to deduct the full cost of the vehicle because we
bought in Spetember 04. If you can find a new or used vehicle for
around $25,000 that will qualify, you'll be in good shape. To
qualify, the vehicle must weigh at least 6000 pounds (GVW). The
Toyota Highlander is only 5360, but the Sequoia would work. We bought
a Dodge Durango and you can get a new base model for around $25,000.
Other vehicles with great enough weight include the Suburban,
Expedition/Excursion, Escalade, Hummer, some full-sized vans, etc.
Some other considerations: the vehicle must be used for business at
least 50% of the time (and the percentage of time it's used for
business determines the percentage of deduction you take.) In
addition, you won't be able to take the deduction if all you're doing
is driving from home to work (even if self-employed at that office).
The only way around this is if you can establish that you have a home
office and that it is a *principal* location for your work. Or, if
you drive great distances to other office locations, that will also
work. in my husband's case, he has a satellite practice in a town two
hours away, and that's how he accumulates a hgh percentage of business
use and meets the test for driving between office locations.
If you sell the vehicle or no longer meet the required tests anytime
during the first 6 years after purchase, there are recapture
penalties. You'll want to be certain you're going to stick with it.
Good luck! |
