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Time running out for Model X 2017 *massive* business-use tax deduction

Time running out for Model X 2017 *massive* business-use tax deduction

Hi everyone,

As some of you are aware from previous threads here and on TMC and Reddit, because the Model X has a weight (GVWR, which is printed on a sticker on inside of frame on driver's door) of greater than 6000 lbs, it qualifies as a commercial heavy-duty vehicle, not as a passenger car. As a result, IF YOU TAKE DELIVERY (not place order but actually RECEIVE and USE the car) in 2017 (even as late as December 31, 2017), you get to depreciate a massive amount of the car's purchase price.

There is a great article at: https://www.mileiq.com/blog/section-179-vehicles-deduction/

There are more articles on this at: http://insideevs.com/tesla-model-x-gvwr-6768-pounds-vehicles-qualifies-2... and http://www.latimes.com/business/autos/la-fi-hy-tesla-tax-break-20151013-...

The Model S is under 6000 lbs GVWR, so it doesn't qualify.

Per the article:

"
You can obtain a substantial first-year deduction if your business car isn’t a “passenger vehicle.”

Example: Sheila pays $100,000 for an SUV [Average price of a Model X] with a gross loaded vehicle weight of 7,000 pounds. Because it weighs more than 6,000 pounds, it is not a “passenger automobile.” Yet, it is subject to the $25,000 limit on the Section 179 deduction for SUVs. Sheila uses the SUV 100% of the time for her travel guide business. She may deduct the following amounts for 2014 [holds true for 2017 as well, when the 50% bonus depreciation will cease to exist]:

Section 179 Deduction $25,000
50% Bonus Deduction $37,500 (50% of the $75,000 basis)
Regular Depreciation $7,500 (20% x %37,500 remaining basis)
Total $70,000

Sheila can depreciate the remaining $30,000 of the $100,000 over the next several years using regular depreciation.

This seems like a great deal for people who want to buy heavy (and expensive) SUVs. Keep in mind, the deduction is proportional to the amount of time you use the vehicle for business. If Sheila used the SUV 40 percent of the time for personal, she’d only receive a $42,000 deduction for the year.

To qualify for the Section 179 vehicle deduction and bonus depreciation, you must use it for business more than 50 percent of the time. This is true for the full five-year depreciation period that applies to vehicles. If your use dips below 50 percent during any of that five-year period, you’ll have to repay your deduction and bonus depreciation. That’s why it’s vital to track your business mileage, no matter what method you’re using to take a deduction."

I called my tax attorney and was told that if I take delivery near the end of 2017 and am careful to use the car SOLELY for business use, as a small business owner, I could legally take 100% business use on my taxes, or reduce that perfecta accordingly if I do use it for personal things here and there.

So if you're on the fence, this is a great time to order it because you would need a couple months of lead time to receive the car (unless you purchase Inventory car) and of course some time to consult your tax adviser. You'll get yourself (rather, your business) a nice Christmas gift, save on gas and maintenance, and enjoy the thrill of a Tesla.

Happy to discuss with anyone -- you can PM me here or email me hdhemmati at gmail dot com. And also happy to privately send you a referral code if you need one, and can introduce you to an all-star OA here in Los Angeles area who can help you find the ideal Model X. Happy shopping!

flyingT | 25 September 2017

Will you accountant also allow for all the energy credits? The $7500 federal income tax and the state rebates/credit? I read in another forum, that their accountant was saying they you couldn't take both.

jamesjackie | 25 September 2017

I was able to take the business deductions from the first post as well as the federal and state credit (CO) for 2016FY and I have already received the refund checks. Quite nice really. The credit is available to whomever (personal or business) buys the EV.

flyingT | 25 September 2017

jamesjackie - if you don't mind, which insurance comp gave you the best quote for a commercial policy?

michealmottiff | 25 September 2017

When are you going to launch your latest model? i also check new updates regards your new making models on http://www.autotransportcity.com/

zanegler | 3 October 2017

The key point, as my tax man explained it, is all section 179 is allow one to take the full depreciation in the first year. Then, the next few years you don't have the depreciation. all other things being equal, it is a wash.

speyerj | 3 October 2017

Keep in mind that commuting to/from your place of business is typically not considered deductible. If you then drive around all day for work, that's covered, but as I recall using your to-from commute driving to qualify for the >50% breakpoint is frowned upon if you're audited. Otherwise many people would qualify to deduct their cars as business expenses.

khanhvn | 3 October 2017

zanegler - "all other things being equal, it is a wash."

But things are not equal :) Regular cars have depreciation limitations that reduce your deduction to $11K in 1st year and $2075 a year after 3rd year. So without 179, it would take 40+ year to fully depreciate your MX :(

With 179 you will get your $ back much faster :)

subodhkhare | 3 December 2018

I got Tesla model X on lease in March 2018 on my personal account. I started a small business in Oct 2018. Can I transfer my Model X lease to business account to avail the first year depreciation (I am anyway using the car for Business purpose)

yep_araneta | 21 February 2019

Hello All, I'm hoping that someone can glance at my basic numbers re: 179 Tax Deductions. I purchased a model X thru my business and I use is approx. 80% of for said business. If I'm understanding what I've read thus far correctly, the breakdown would be as follows based on a purchase prices of $105,000:

$25,000 (Section 179 Deduction)
$32,000 (40% Bonus Deduction based on 80% business usage)
$9,600 (Regular Depreciation - 20% of remaining $48,000)

Total = $66,600

Does my calculation appear more or less correct? (Disclaimer: This is of course my responsibility and I hold no one accountable for rendering an opinion. Hahahah)

Thanks

yep_araneta | 21 February 2019

Hello All, I'm hoping that someone can glance at my basic numbers re: 179 Tax Deductions. I purchased a model X thru my business and I use is approx. 80% of for said business. If I'm understanding what I've read thus far correctly, the breakdown would be as follows based on a purchase prices of $105,000:

$25,000 (Section 179 Deduction)
$32,000 (40% Bonus Deduction based on 80% business usage)
$9,600 (Regular Depreciation - 20% of remaining $48,000)

Total = $66,600

Does my calculation appear more or less correct? (Disclaimer: This is of course my responsibility and I hold no one accountable for rendering an opinion. Hahahah)

Thanks

MelaniaFromBrentwood | 21 February 2019

Nope - now it's 100% bonus depreciation for 2018 and beyond, so you get 80% of the purchase price depreciated in year one!

yep_araneta | 22 February 2019

Thank you, but I'm somehow finding this hard to believe - in a good way. Is it now 1 simple calculation of: $105,000 x 80% = $84,000 in deductions OR does I use the previous formula:

$25,000 (Section 179)
$64,000 (80% bonus deduction @ 80% business usage)
$3,200 (20% x $16,000 remaining basis)
Total = $92,200

Thanks again.

Uncle Paul | 22 February 2019

Everyone has different tax situations.

In my case, the CPA was able to maximize my tax liability.

Model X75 ended up costing me a net of only $35,000.

I pay a lot of taxes, so your results may be different.

greensbr | 11 March 2019

If your tax accountant is maximizing your liability, then you need a new accountant;)