itsZep

i got this e-mail from my local Lexus dealer....
anyone know the details?
can ya get a $25K deduction for buying a new GX?



The 2008 Economic Stimulus Act may just stimulate your decision to place a new vehicle into service before the year is out.

The 2008 Economic Stimulus Act increases the limits of a 179 deduction for eligible new truck purchases placed in service by December 31, 2008. Which means, you can now receive a $25,000 deduction on many. Contact us for a complete list of eligible vehicles.

BONUS DEPRECIATION.
You may be able to take an additional first year special depreciation allowance on certain eligible purchases. This allowance is an additional deduction of 50% of the property's depreciable basis.

SAVE MONEY.
You may benefit from the 2008 Economic Stimulus Act. And of course, add to your business capabilities. Come in before December 31, 2008 and let us help you make it happen. Also, be sure to consult your tax professional for details.

Visit one of our locations listed below or visit our website at sewell.com.

BurgBoxstr

you cannot but a business can using section 179 plus get bonus depreciation during the first year. Suggest you contact a CPA to understand all the benefits / limitations etc. associated w/ section 179 deductions to see if a biz you may own qualifies. This is basically just a sales tactic hoping some current small biz owners get this letter and in year end tax planning strategy come in and buy a qualifying SUV (must be over 6000# GVWR).

Section 179 is not new - been around for a while. Some limitations/benefits were changed this year. Under the original section 179 you used to be able to deduct up to $100K in the first year on the purchase of vehicle over 6000# GVWR. They closed the "SUV" loophole 3 or 4 years ago though so now it's only $25K in first year...

itsZep

Thanks Burg.....That is my exact situation. My brother and I own a small company and our GX's are "company cars". I wonder if this "section 179" deduction is ending this year or will the same likely apply next year too?

jacksonian

My wife and I bought 2 GX's in '03 and '04 under the 179 for our businesses (both independent contractors). When she got hers in '03, it was still under that $100,000 rule and she got to write off the whole $50k price of the truck in the first year. By the time I bought mine in late '04, they had changed the rule so that it is now, you can write off $25,000 this first year for immediate depreciation plus an additional 50% of what's left for bonus depreciation plus your normal 20% of what's left for the first year's depreciation and then you depreciate the rest over the next 4 years.

So for a $50,000 GX, you could write off $40,000 the first year ($25,000 + $12,500 + $2,500), and then the last $10,000 would be spread over the remaining 4 years.

To see how much money you'll save, just take your highest tax rate for your income and multiply it times the $40k. You'll essentially save about $15k off the price of the truck if you're in the 34% tax bracket at your highest.

What's changing on 1/1/09 is the bonus depreciation. That goes away. So if you plan to buy in the next year or two, it probably makes sense to do it before the end of this year. The other question is whether Obama will try to close the SUV part of the deduction altogether, maybe raising the weight requirement or just excluding all these non-commercial vehicles.

Now, I am not an accountant, but I have one. This is how he advised me. And I'm looking at the BMW dealer sales bulletin that illustrates this example. Do not base any decisions on what I've written, consult your CPA. You have to be using the vehicle for a business or independent contractor and you're only allowed to deduct the percentage of business use which has to be at least 50%. So you can't write off 100% of the truck unless you use it absolutely 100% for business and not a single mile for personal use.

Rob Daman

i remember they called it the Hummer tax since that fit the bill for deductions.

Johnny Rad

You said hummer.

sapravi

The new lexus rx350 gvwr is greater than 6000 lb. So will this qualify for the tax deduction

The G Man

The 2008 Economic Stimulus Act states that you can deduct any new car's sales tax, excise tax and reg. fee. That new car has to be purchase after April 09 I believe.

BurgBoxstr

It qualifies for the economic sales tax portion as an individual provided you're not over the phase out range. However, it doesn't make the grade for the Sect. 179 deduction. The new RX350 is not over 6000# GVWR according to the #s as listed by Edmunds.com

AWD version is:
Curb Weight: 4343 lbs. + Max Payload: 1307 lbs.
= Gross Weight: 5650 lbs. (aka GVWR)

FWD Version is:
Curb Weight: 4178 lbs. + Max Payload: 1382 lbs.
= Gross Weight: 5560 lbs. (aka GVWR)

The RX450h FWD = 5770#

The RX450h AWD is oh so d@mn close at.... 5980# but still under

Before you jump into any purchase for sect. 179, YOU have to triple check the vin tag in the driver's door to make sure it states GVWR is over 6000#. don't count on a salesman or anyone else to do so. IIRC, Lexus had an issue w/ the very first GX470s w/ vin tags under 6000#. Some people had issues w/ their purchases being disallowed under sect 179. Details in the archives here pertaining to such.