TESLA X section 179

[EXOTIC1]

Does the X qualify for a section 179 ?
I seem different answers hopefully someone can explain that knows for sure. I was told if it does qualify purchase can be new or used

 

[msm859]

Does the X qualify for a section 179 ?
I seem different answers hopefully someone can explain that knows for sure. I was told if it does qualify purchase can be new or used

Pretty much "anything" (business equipment) would qualify for a 179 deduction. I suspect what you are actually asking is if it qualifies for bonus depreciation because of the gvwr over 6000 lbs. And yes it does - new or used.

 

[Uncle Paul]

Remember. It is not the weight of the base car than triggers the deduction, but the GROSS vehicle weight. Combines the weight of the car plus the weight it can carry. You can verify the Gross vehicle weight on the door sticker.

You deduct $25,000 PLUS the rest of the $ you paid for the car. Essentially get to write off the entire purchase price the first year you place it into service (delivery date).

This is a write off of profits from your company. Not a tax credit (which you might have gotten last year as well.

For many, this makes a Model X the least net expensive of all the Tesla lineup. A Financial no brainer for those qualified.

Maybe why it is so popular with Physicians, Accountants and small business owners.

 

[Ron97062]

Since the Tesla Model X is greater than 6000 lbs GVWR, it also qualifies for Section 168 which can be far better than Section 179. This "Bonus First-year Depreciation of business assets" may allow you to write off 100% of business use of the vehicle in the year it was acquired. For example, let's say you purchased the vehicle on December 17, 2019 and used the vehicle entirely for business use for two weeks. You can write off 100% percent of the vehicle when you file your 2019 taxes, since it was in 100% business use in 2019. In subsequent years, as long as you keep the business use above 50%, there is no depreciation recapture. IRS Link. The Model X is the only Tesla that qualifies for this.

 

[mattack4000]

Except personal use miles on W2 income are consider taxable income and pass thru needs to have the personal portion backed out

 

[Ron97062]

Except personal use miles on W2 income are consider taxable income and pass thru needs to have the personal portion backed out

This applies to operating costs (expenses like maintenance, etc). In my scenario above, after the vehicle is 100% depreciated, there is no more depreciation in the subsequent years because the vehicle has been totally written off. For people with small businesses, Section 168 can be a powerful tax planning tool.

 

[mattack4000]

irs isn’t going to let you buy a car under the business and let you use it for free. If you tell them the car is use for 80% business to start, your cost basis would only be 80% of the purchase price

 

[MD JD]

In subsequent years, as long as you keep the business use above 50%, there is no depreciation recapture. IRS Link. The Model X is the only Tesla that qualifies for this.

No. If you sell the car ever in the future, you will get depreciation recapture.

 

[Ron97062]

No. If you sell the car ever in the future, you will get depreciation recapture.

Yes, of course. And, subsequently, your business use would drop to zero.

 

[MD JD]

Yes, of course. And, subsequently, your business use would drop to zero.

Because the HOV sticker will expire so I will sell the car for sure before 2024 for another car with the HOV sticker. Actually I sold the last prius prime in less than 2 years for this car so it could happen even sooner than 2024. I just told the accountant not to claim section 179. Mileage wise I do 27K miles a year so it is not a bad tax break doing that way without worrying about the recapture issue.

 

[sahillsmehta]

Hi @MD JD I'm a few weeks away from turning in my current lease, and seriously considering the X. Super curious about what you wrote above, and had few questions. I established an S corp for my self in Nov 2019. I don't fully grasp yet how to optimize my next vehicle purchase. From what I have been reading online, getting a car to qualify for Sec 179, and in this case, 168 seems like a big plus. For example sake - If I go $7.5K down on a $120K model X (finance the rest), how much can I write off? Unfortunately, I haven't come across a solid CPA yet either, i'm totally open if you have any recommendations! PS I see you are in Alameda (I'm around Berkeley!)

 

[ithinkmac]

You can write off the full amount (purchase price, not what you're financing). There is a future recapture if you sell the company asset.

-ThinkMac-

 

[RiderVinny]

Remember. It is not the weight of the base car than triggers the deduction, but the GROSS vehicle weight. Combines the weight of the car plus the weight it can carry. You can verify the Gross vehicle weight on the door sticker.

You deduct $25,000 PLUS the rest of the $ you paid for the car. Essentially get to write off the entire purchase price the first year you place it into service (delivery date).

This is a write off of profits from your company. Not a tax credit (which you might have gotten last year as well.

For many, this makes a Model X the least net expensive of all the Tesla lineup. A Financial no brainer for those qualified.

Maybe why it is so popular with Physicians, Accountants and small business owners.

is the deduction against the tax you owe (let's say if you owe about $5K, you will only get $5K credit even though you qualify for more.
Or will you get a refund (all the credit - $5K in this case)?

 

[mattack4000]

You guys are lucky the irs audits a tiny subset of the population.

 

[msm859]

Hi @MD JD I'm a few weeks away from turning in my current lease, and seriously considering the X. Super curious about what you wrote above, and had few questions. I established an S corp for my self in Nov 2019. I don't fully grasp yet how to optimize my next vehicle purchase. From what I have been reading online, getting a car to qualify for Sec 179, and in this case, 168 seems like a big plus. For example sake - If I go $7.5K down on a $120K model X (finance the rest), how much can I write off? Unfortunately, I haven't come across a solid CPA yet either, i'm totally open if you have any recommendations! PS I see you are in Alameda (I'm around Berkeley!)

As long as your business use is over 50%, you can deduct the percentage of your business use. The write off is based on the purchase PRICE, doesn't matter how much you put down or financed. Not sure why one would not take advantage of this. Rule 1 is deductions as soon as possible, income as late as possible.

 

[msm859]

is the deduction against the tax you owe (let's say if you owe about $5K, you will only get $5K credit even though you qualify for more.
Or will you get a refund (all the credit - $5K in this case)?

No the deduction is against you business "income". It reduces your taxable income.

 

[TMYB-C1]

Is any of this allowable with a single member llc? I have a MY on order which milage wise will be used mostly for client visits, trying to understand if it's make sense to go with an MX instead?

 

[bayareaever]

Anyone know if the new X is still heavy enough to qualify?

Also, maybe cpa question- I have w2 income but my wife has her own business. We file jointly. If I’m on the title but she isn’t, would that matter for taking the deduction?

 

[msfraut97]

Anyone know if the new X is still heavy enough to qualify?

Also, maybe cpa question- I have w2 income but my wife has her own business. We file jointly. If I’m on the title but she isn’t, would that matter for taking the deduction?

It is, we discussed this in my model X Facebook group and they said it is because the weight of the car AND the weight it can carry push it over 6000 lbs.

 

[msfraut97]

Does anyone know if Section 179 can be used to reduce personal income as well?