docjackson1

is the tax break for the cayenne-toureg still available? i read someplace that the senate finance committee was going to close the loop hole. if it is still available, how does it work-how much would you save?

PogueMoHone

Yep, it's still available. The Senate Finance committee didn't recommend repealing it.

If you have a business purpose you can write off up to $100K in the year of acquisition. This applies to all vehicles which have a gross vehicle weight over 6000lbs. Gross vehicle weight includes weight of the vehicle, luggage and passengers.

Consult your tax advisor to determine if you qualify.

docjackson1

thanx, colm.

DC from Cape Cod

% of ALLOWABLE business miles / total miles = % of vehicle price that can be depreciated via Sched. 179. Your business income must exceed this amount to take the deduction. You ara also allowed to write off expenses associated with running the vehicle including interest on the loan to buy it.

docjackson1

let me as then-if i purchased a toureg for $42,000, or a cayenne for $56000, just how much could i write off-in other words, how much tax would i save. i am a doctor, and can use it for business. if i already have my business pay for a percentage of my carrera, can it also pay for the suv?

johnhct

You are essentially buying the car with pretax dollars. Let's say you are in a 40% tax bracket (fed and state combined). If you use the Cayenne for 100% business (he-he) then you have reduced your income by $56K. Your take-home from that $56K would have been $36.6. So, if you bought a non tax deductible car for $36.6 or a pretax car for $56, it cost you the same.

HTH,

DC from Cape Cod

However, it is impossible to use it 100% for business.

Commuter mileage is not deductible.

Also, your first stop of the trip is not deductible.

So, if your first stop was 1/10 of a mile down the road and then you drove another 500 miles...you could deduct almost all...but not 100%.

docjackson1

if i already write off a piece of my tt for my practice, can i also write off the suv, if i use them both for business?

johnhct

Some of us work from home. Hence, no commute.

You do need to have another car for personal miles.

docjackson1

can you write off 2 cars for business, if you use them both?

johnhct

I'm not an accountant, but I don't think there is any limit to the number of business vehicles you can have.

At least 50% of the miles on each car must be business miles.

The deduction is, of course, proportional to the percentage.

docjackson1

thanx john

GM Austin

If the SUV is a substitute for some or all of the business miles you now drive in the twin turbo, you may have to reduce your twin turbo deduction by the amount your usage has changed.

An even better answer though is to pose these questions to a person who is prepared to defend the answers before a tax auditor, like the person or firm that does your tax return.

docjackson1

good point. the main reason that i bring this up is that i presently have an 02 freelander. i read about this deduction and was wondering if it makes sense financially to take advantage of the suv deduction and flip the freelander for the toureg/cayenne, which qualifies under the weight limit of 6000 lb gross.

PogueMoHone

It makes sense to flip the Freelander for a Cayenne..even without a tax deduction.

However, on another point it seems to me that the tax advantage on the TT is severely limited because of luxury car limitations. So , intuitively, you would be better off getting of a Cayenne (which is not subject to the same limitations) and maximizing the benefit to yourself.

E.G. The max deduction on the TT may be $7K per year and the max deduction on the Cayenne is $100K. If you look at in this light the Cayenne may actually subsidize the costs of the TT, even if you lose the deductibility of the the TT.