When you run a thriving, successful business, every little bit helps. You can get even more out of the durable, reliable Ford commercial vehicles you purchase at Sanderson Ford in Glendale by taking advantage of a couple of great tax breaks. Thanks to section 179 and 100 percent bonus depreciation, the full cost of your business’ Ford SUV, truck, or van may be covered by Uncle Sam.
What’s section 179
According to the Internal Revenue Service, you can expense the costs of new property for your business up to a maximum of $1,040,000 in 2020. The maximum expense deduction for a heavy sports utility vehicle or other qualifying vehicle placed into service during 2020 is $25,900 per vehicle.
Per the IRS, the $25,900 maximum applies to any vehicle that is designed for carrying passengers over public streets, roads, and highways and is rated between 6,000-14,000 pounds gross vehicle weight.
There is no deduction limit, however, for vehicles that:
Seat nine or more passengers behind the driver’s seat (shuttles and taxis based on the E-Series or Transit may qualify for this exception)
Feature a cargo area (open or enclosed by a cap) that is at least six feet in length and not readily accessible through the passenger compartment (select F-Series trucks may qualify for this exception)
Have a fully enclosed driver’s compartment, no seating behind the driver’s seat, and has no body section protruding more than 30 inches from the windshield’s leading edge (select Transit and E-Series cargo vans may qualify for this exception)
If you’re planning on purchasing a commercial vehicle from Sanderson Ford and aren’t sure whether it qualifies under section 179, consult your tax professional. But don’t delay: You must lease or purchase a vehicle before Dec. 31, 2020, to qualify for the deduction on your 2020 tax returns.
How to use bonus depreciation
If you take advantage of section 179 and have a balance left on your commercial vehicle purchase, the Tax Cuts and Jobs Act offers 100 percent bonus depreciation on qualified property purchased up to Dec. 31, 2022. If you purchase a commercial vehicle from Sanderson Ford and place it in service any time from Sept. 28, 2017, to New Year’s Eve 2022, you can deduct up to 100 percent of the cost of depreciation.
Vehicles that are 100-percent for your business qualify for a full 100 percent bonus depreciation. That means you can write off the full value of your vehicle the same year you purchase it.
For vehicles used partly for business and partly for personal use, the deduction lines up with how much your vehicle is used for work. In order to qualify for bonus depreciation, you’ll need to use it for your business more than 50 percent of the time and log your miles. Your depreciable basis is based on the purchase price of the vehicle multiplied by the percentage it’s used for business purposes.
Taxes can be tricky, so be sure to talk to your accountant or tax pro to make sure you’re taking full advantage of the TCJA and section 179. The finance department at Sanderson Ford is also here and ready to help whenever you need us. Because we know that your business helps Glendale work, so we want to work just as hard for you.