How about a new car Christmas??
This is another car tax deduction so buckle up.
Let’s say you have completely paid off your business car which means there are no more deductions associated with it. You might think this is the end all be all for deductions, but there are actually more you can take advantage of.
What do you do with the car now that it’s paid off? Well, if you’re like most people, you probably give it to your kid.
But there is another strategy you can use to get a deduction on your vehicle.
You read that right, sell your kids’ car.
In fact, sell it before December 31st!
Here’s why: By selling your car, it will likely create a loss for your business because cars are depreciating assets.
So here’s the math.
In this scenario, assume you bought that business car for $50,000 and you sold it for $30,000. That is a loss for your company and it means you can immediately take a tax deduction on that $20,000. This is dependent on the business and the life of the car. The point is, since it creates a loss you can take advantage of this.
Sounds great, right?
Well, it’s time to turbo charge it. Your kid probably won’t be too excited if you sold their car, and understandably so.
If you followed our BollitProof strategies and designated your child as an employee of your business, by selling the car they were driving they technically took a capital loss for your company.
So what can you do now that your employee is out of a car?
You can turn around and buy them a Section 179 applicable vehicle. Check out the article we did on 179 tax deductions here.
Keep in mind, the car you purchase does not have to be new, just new to you. And by following the Section 179 guidelines you would get a full deduction of the car’s sale price. That’s a 100% deduction, people!
How’s that for the best of both worlds? You get a tax deduction and your kid gets a new car.
Seems like a pretty good Christmas to me!