[Cc20]

I have a question on what the best way to buy and title a car is for tax purposes? I’ve heard about the section 179 depreciation but how beneficial is that really? Also are there other weird work arounds just to maximize savings?

[SpeedyATL]

No accountant here, but I believe to really take advantage of the tax benefits of 179, you need to have a GVWR of greater than 6k. To do the 179 accelerated depreciation though, the car has to be bought and titled in the business name. And even in some of the qualifying cases, it is still more beneficial to expense the business miles instead of writing off the truck/suv.

I think it comes down to if you are a high-miler, better to write off on a per mile basis.

I'm sure there are others here more knowledgeable that can provide better input but didn't want to leave you hangin' bro....

[Revan]

IIRC the accelerated depreciation for vehicles not already put in service is over and you were limited in the cost of vehicle (maybe 60k) unless it was an SUV or as Speedyatl said, over 6k gvw.

You can however lease the car, then write off the full payment, tag, insurance, maintenance, etc. In the % of business use.

[micvite]

Originally Posted by Revan

IIRC the accelerated depreciation for vehicles not already put in service is over and you were limited in the cost of vehicle (maybe 60k) unless it was an SUV or as Speedyatl said, over 6k gvw.

You can however lease the car, then write off the full payment, tag, insurance, maintenance, etc. In the % of business use.

It's not over just yet, just extremely neutered you can't just deduct the whole car anymore, it has a cap (28k for the current year iirc)

[jnotrom711]

It's actually at 80% of what it was in 2022 (I think). It still exists. There is a lot of stipulations on the vehicle and whats considered business use if you want the full benefit of 179. Highly dependent on what you do for a living as well, and what your main source of income is.

I use it, and will this year on my G63 I bought. owning a real estate sales & development company, which is no problem, but would potentially be an issue or cause a red flag if you tried to use section 179 as a business deduction if you owned a business where it would be difficult to show the car is 100% for business use.

There is a lot of nuances stipulations and ways to use it, but the general gist of it goes something like this:

200k in business income and you buy a 180,000.00 G Wagon, and use section 179 and take all the depreciation and bonus depreciation upfront, your taxable income is now 20,000.00. It's not quite that simple but thats kinda how it works. Essentially a business expense. To get the full benefit you need to to have a vehicle that qualifies, an M5 does not. It may be able to be used as business expense etc, but the big benefit would not be there because the vehicle weight is under 6,000 GVW, the larger BMW SUVs would qualify typically. X5, X6, X7 etc.

This also applies wether or not you finance the vehicle. You can get the full write off of the purchase costs, and finance 100% of it (if you want). Just have to keep the vehicle in service for I think 5 or 7 years or you'll owe the depreciation back.

You can also license/register the vehicle in a business name that has its business address registered in Montana, which is why (at least in Arizona) why we see tons of high end cars with Montana license plates. Can avoid sales tax all together, and the car is registered in the business name in Montana. Saved about 20,000.00 on my G63 purchase.

Typically for other write offs it's better to lease, but thats a longer explanation than I care to explain.

Also you can of course use vehicle expenses, maintenance, gas, etc, or use the standard mileage deduction, which I believe is 65.5 cents per mile (it fluctuates with gas prices and inflation), but thats another nice benefit of using a vehicle for business use.

[micvite]

Originally Posted by jnotrom711

It's actually at 80% of what it was in 2022 (I think). It still exists. There is a lot of stipulations on the vehicle and whats considered business use if you want the full benefit of 179. Highly dependent on what you do for a living as well, and what your main source of income is.

I use it, and will this year on my G63 I bought. owning a real estate sales & development company, which is no problem, but would potentially be an issue or cause a red flag if you tried to use section 179 as a business deduction if you owned a business where it would be difficult to show the car is 100% for business use.

There is a lot of nuances stipulations and ways to use it, but the general gist of it goes something like this:

200k in business income and you buy a 180,000.00 G Wagon, and use section 179 and take all the depreciation and bonus depreciation upfront, your taxable income is now 20,000.00. It's not quite that simple but thats kinda how it works. Essentially a business expense. To get the full benefit you need to to have a vehicle that qualifies, an M5 does not. It may be able to be used as business expense etc, but the big benefit would not be there because the vehicle weight is under 6,000 GVW, the larger BMW SUVs would qualify typically. X5, X6, X7 etc.

This also applies wether or not you finance the vehicle. You can get the full write off of the purchase costs, and finance 100% of it (if you want). Just have to keep the vehicle in service for I think 5 or 7 years or you'll owe the depreciation back.

You can also license/register the vehicle in a [...]

The one stipulation with montana is that they only register cars SOLEY in the business name aka your business has to qualify for financing ALONE or you pay cash for the car.

[jnotrom711]

Originally Posted by micvite

The one stipulation with montana is that they only register cars SOLEY in the business name aka your business has to qualify for financing ALONE or you pay cash for the car.

Theres ways around that also, but you're sort of correct. You can be a personal guarantor for your business if you wanted, and there is other work arounds also.

I have a guy that does it all for me. He sets up the LLC, and registration etc... it can also be a separate LLC under the main LLC, and the new LLC is registered to do business in Montana, and the main business is in AZ (in my case), idk all the exact ins and outs, but can certainly still do it.

My G63 and M5 paid cash for, so it doesnt really matter, but could also pay cash, get it registered in Montana under the business name, then transfer title into my own name, or add me to the registration, and work around it that way.

Again, I just have a guy that does it for me, so I don't know every little in and out of it, but it can certainly be done.

In the case of my M5, I bought it from a private party, so I didn't pay sales tax on it anyway, AZ does not charge sales tax on private transactions (person to person) so that one didn't matter, but the G63 I bought in Las Vegas from a dealership, they had title in hand, the rest was handled by my guy.

[micvite]

Originally Posted by jnotrom711

Theres ways around that also, but you're sort of correct. You can be a personal guarantor for your business if you wanted, and there is other work arounds also.

I have a guy that does it all for me. He sets up the LLC, and registration etc... it can also be a separate LLC under the main LLC, and the new LLC is registered to do business in Montana, and the main business is in AZ (in my case), idk all the exact ins and outs, but can certainly still do it.

My G63 and M5 paid cash for, so it doesnt really matter, but could also pay cash, get it registered in Montana under the business name, then transfer title into my own name, or add me to the registration, and work around it that way.

Again, I just have a guy that does it for me, so I don't know every little in and out of it, but it can certainly be done.

In the case of my M5, I bought it from a private party, so I didn't pay sales tax on it anyway, AZ does not charge sales tax on private transactions (person to person) so that one didn't matter, but the G63 I bought in Las Vegas from a dealership, they had title in hand, the rest was handled by my guy.

That's what I'm saying you can't be a personal guarantee for the business and cosign the loan. Mt doesn't allow you to title the car in both business and personal name and if you sign the loan you technically have to be on the title. Ask me how I know


I did the next best thing. Bought a house😂😂

[jnotrom711]

Originally Posted by micvite

That's what I'm saying you can't be a personal guarantee for the business and cosign the loan. Mt doesn't allow you to title the car in both business and personal name and if you sign the loan you technically have to be on the title. Ask me how I know


I did the next best thing. Bought a house😂😂

Well I dont buy houses in montana, no reason for me to do that, and the guy who's doing it for me has done 1000s and he said otherwise, but doesn't matter anyway, I own it free and clear.

[micvite]

Originally Posted by jnotrom711

Well I dont buy houses in montana, no reason for me to do that, and the guy who's doing it for me has done 1000s and he said otherwise, but doesn't matter anyway, I own it free and clear.

Yeah owning it free and clear means you can do whatever you want, financing means you have to take the load fully in the business name and your personal can't be attached. And that's per the department of state and the dmv because that was my first choice when doing it and I've talked to the lawyers and companies that set this up and they all said same thing; cash sake only, no financing.

[windtendo]

I'm just gonna say it. Something feels slimy about the Montana sales tax loophole...

[micvite]

Originally Posted by windtendo

I'm just gonna say it. Something feels slimy about the Montana sales tax loophole...

It's not particularly slimy as long as you're following all the other rules and regulations (like having the car parked in MT more than anywhere else, which I do by traveling all over the usa and vacationing there in the summer) the business loophole a lot of states are cracking down on from what I've read. So ideally you just buy yourself a nice summer cabin and enjoy the beautiful weather all summer😂😂

[Dark-Knight]

Originally Posted by windtendo

I'm just gonna say it. Something feels slimy about the Montana sales tax loophole...

I think its slimy to charge me sales tax on a used vehicle, or property tax on a vehicle, that pays gas tax and sales tax, yet that doesn't stop the government.
If you bought a Singer, it would be worth it to park it in Montana half the year and buy a condo there to live in, but people from Cali will do that and vote in people who will destroy the place, vulgarians.