Tax Rules For Buying A SUV Or Truck To Deduct As A Business Expense

Range Rover Sport NewAs you may have read from my Net Worth Rule For Car Buying post, I’m looking into buying the redesigned Range Rover Sport HSE to replace Moose, a 13 year old Land Rover Discovery II. The Range Rover Sport can be had for roughly $73,500 MSRP, an exorbitant amount of money for a vehicle. The last time I spent over $70,000 for a vehicle was in 2002 when I bought a $77,000 Mercedes G500. I was much poorer then, but I just got my first bonus at my second job and wanted to splurge. I told myself never again after I sold it for a nice loss a year later in order to purchase my condo. The G-Wagon didn’t fit in the garage because it was too tall!

SUVs are an anathema to eco friendly San Francisco. But I’ve long argued that if you don’t completely destroy your car before buying a new car, you are still ADDING pollution to the world. I like SUVs because they ride high so I can see what’s going on in traffic. They can go through snowstorms with ease, a necessity for when I go up to Tahoe in winter. Furthermore, I’d rather be in a larger vehicle vs. a smaller vehicle during accidents.

SUVs have become more fuel efficient thankfully. The new Range Rover Sport V6 engine produces 345 hp at 17 city / 23 highway. Just 10 years ago such an SUV would be a V8 and run around 12 city / 17 highway mpg with only 185 hp. But this is not a post to defend purchasing a large vehicle. This post’s purpose is to discuss the aspect of purchasing a vehicle for your business in order to deduct the expense!


The Net Worth Rule For Car Buying Guideline

Fantastic Car Sale13 year old Moose is starting to give me fits. His cruise control just died and I’m starting to worry about safety. I just spent $800 this summer on a new steering pump, timing belt, and 125,000 mile tune up so it’s disappointing to see another issue come up.

Besides the cruise control not working, the brakes are mushy, the airbags haven’t been serviced at the 10 year mark, the traction control and ABS lights are on, and a couple $220 M+S tires are balding. Oh yeah, the CD player doesn’t work either and there’s no bluetooth of course! My trusty mechanic of 12 years said Moose is operationally fine. The dashboard lights are just on due to a broken fuse lodged deep inside the control panel that makes it not worth replacing. Still, I have my doubts.

Now that I no longer have a job, I’m having a more difficult time accepting my 1/10th rule for car buying. I introduced the rule to those who still had to work for a living in order to not have to work forever for a living. It seems only fair that someone who is retired should be able to spend more than 1/10th their income on a car since they were able to cross the finish line don’t you think?

Based on the 1/10th rule for car buying, I can buy a new compact car. The problem is, I want the latest Range Rover Sport that costs $90,000! I’m not pulling in anywhere close to $900,000 a year so I’m forced to strategize and change my car buying guidelines to fit my desires. See how easy it is to justify our spending choices?

The Best Time Of The Year To Buy A Car

Black Audi R8 V8My 13 year old SUV named Moose feels like it’s on its last legs. There’s a loud whiny noise every time I turn the steering wheel, which likely means the power steering box is cracked. Moose drips engine oil everywhere he goes and now he leaks coolant!

With a Blue Book value of only around $3,000, spending ~$1,000 to fix doesn’t seem prudent. It costs around $100 to fill up his 24 gallon tank and he only gets roughly 16 miles per gallon. Luckily I only drive about 6,500 miles a year.

The other reason why I’m looking to buy a new car is due to the advancement in safety features. Better brakes, better traction control, and more airbags would be nice. I’m not even sure my airbags work after 13 years!

One of my all time favorite things to do is spend time at a car dealer. There’s nothing like inhaling that new car smell and taking the latest models for a spin for free. All told I’ve probably visited a car dealership 25 times in the last 12 months and probably over 100 times in the last five years. Call me thorough, crazy, an enthusiast, or simply a consumer who shows great constraint for not spending any money on one of his favorite things. Whatever you say there’s nothing better than finding something you love to do that’s free.


The Car Sharing Economy Is On The Rise: A Conversation With RelayRides

RelayRides Car SharingIt hit me the other day that I’ve been sitting on a goldmine of wealth and knowledge living here in San Francisco, the startup capital of the world. As a 12 year resident of the city with an entrepreneurial bug, a desire to meet more interesting people, and a personal finance blog with a yearly readership in the millions, what a great opportunity to meet up with some of the promising new companies of our generation and bring their stories to all of you. I plan on profiling at least one new startup a quarter in an assortment of industries. I hope you enjoy the new series!

For most people, your car is usually your first or second most valuable asset, and it’s also one of the fastest depreciating assets. Long time readers know that I don’t recommend anybody spend more than 1/10th of their gross income on a car if they want to build financial wealth.

Not only do you have to pay ongoing operating and maintenance costs, you’ve also got insurance costs that could easily total in the thousands of dollars a year. With the average car sitting idle 92% of the time, most folks are flushing money down the toilet with cars they don’t need.

The multiple financial meltdowns over the past 10 years have created a shift in consumer’s attitudes towards ownership. I think consumers are wisening up to the fact that tying up a lot of capital to own a car when good jobs are hard to come by is foolish. Millions of car owners with uncomfortable car payments that last long after the initial euphoria of ownership wears off are wondering how to mitigate costs.

RelayRides is trying to make these economics more favorable for their car owners by allowing them to turn this idle, depreciating asset into a source of income. For car renters who want to preserve their capital, but still want the flexibility of having a car for 20-40% cheaper than renting from a large agency like Avis or Hertz, RelayRides wants to help you as well.


Supporting Our Veterans Back Home – Sponsored Video

Blue Angel In The SkyMy grandfather served in World War II and my father served in Vietnam. I on the other hand, served in no wars, making me itch for ways to give back. I feel a little unworthy as so many brave men and women each year serve to protect us back home. Perhaps bringing to light Veteran issues on this platform can help.

It’s a shocker to discover there are over 130,000 homeless veterans in America today (new reports show the figure is down by 48% since 2008 to roughly 62,000). It’s also a big disappointment to read our troops struggling to find work when they return. When a representative on behalf of Jeep contacted me to sponsor this post as we wait for the resolution of the Fiscal Cliff, I happily obliged in order to continue raising awareness. The original Jeep Bantam BRC became the primary light 4-wheel-drive vehicle of the United States Army and Allies during World War II.

In the Spring of 2012, President Obama proposed the Veterans Jobs Corps Act. The price tag for such help came at an additional $1 billion dollars a year for the already $109 billion VA budget for 2013. Does $1 billion or even $110 billion sound like a lot? It depends, given we spent $1 trillion fighting in Iraq and $3-$4 trillion if we include our fights in Afghanistan and Pakistan.

Suddenly, spending 1/40th the amount we spent on three wars to help our soldiers doesn’t seem like much at all. What the spending ratio tells me is that there is a way for the US government to do more if they choose. Here is some information from on what they are doing for Veterans.