Tax Credit Information: Section 179
Vehicle Depreciation Tax Information – Tax Breaks Make This the Best Time To Buy
If you are thinking of buying new vehicles for your business this could be the year to do it. That’s because not one, but two laws passed in the last few years that have greatly increased the amount of your immediate tax write-off for making such purchases.
One of the more popular uses of the Section 179 Deduction has been for vehicles.
Vehicles used in your businesses qualify – but certain passenger vehicles have a total depreciation deduction limitation of $11,060, while other vehicles that by their nature are not likely to be used more than a minimal amount for personal purposes qualify for full Section 179 deduction.
The website Section179.org is a helpful resource for figuring out Section 179 deductions, and covers the details in plain language, including what property qualifies and the many ways that the deduction can impact your bottom line. The site also has IRS tax forms, and tools for you to use, including a free Section 179 deduction calculator.
Depreciation Explained
Millions of Americans buy new and used cars, trucks, vans and other vehicles every year. A vehicle purchase can be expensive; most need a loan. There are many considerations to take into account: new or used, make, model and year, just to name a few. An important part of buying a vehicle is understanding how automobile depreciation is calculated, though depreciation levels differ for each vehicle.
Significance
Depreciation is the rate at which a vehicle loses its value in the marketplace. With the exception of collector autos, once a vehicle has been sold, it is rarely sold again for the same price. This means when you purchase a new car, the car immediately loses some of its value when you drive it off the dealer’s lot. It also means when you buy a pre-owned car, even if it is in like-new condition, you will not pay the full sticker price.
Causes of Depreciation
Multiple factors effect vehicle depreciation. Geographic location and time of year can both play a part. The make and model of the vehicle also affects the depreciation rate — in general, the more expensive and well-known the brand, the less it will depreciate. A vehicle’s age, mileage, accident record and the general condition are the primary influences factored in the depreciation rate. It’s important to remember the depreciation level of every car is unique.
Benefits
If you’re in the market for a car, you can use depreciation to your advantage if you’re willing to buy a used vehicle. Program cars, leased automobiles, and even dealership loaner models often end up on car lots in nearly new condition. But they cost considerably less than they did new, thanks to depreciation.
