This past week, I wrote a blog about the new bonus depreciation and how it can work in conjunction with Section 179 so that you get a full write-off of a heavy vehicle you use in your business. That’s true even if you finance the vehicle. You still get to write off all of the purchase price.
Here’s a follow-up question that I received regarding the original blog:
“You just wrote about deducting a new vehicle purchase and that was excellent.
I plan on purchasing a new 2018 large sized SUV to use for my business.
How should a business owner ‘title’ the vehicle?
- Just in their personal name,
- In the name and ownership of the business,
- In a separate LLC to own the asset.
As a follow on, does my insurance agent care which I choose?”
I’ve found that a lot of my clients like to buy the vehicle in their own name if they are financing it. That will often mean lower interest rates. The safest answer is to put it in a separate LLC. That way if there is an accident with the vehicle and there is a judgment associated with the vehicle, it won’t necessarily pull your other business into the lawsuit. That may be overkill, though, because if it was an employee of the business (including you) and you were working at the time, the business is probably liable either way.
The insurance will probably need to follow the title. If you personally own the vehicle, then you personally have the insurance, for example.
The IRS has so far held that if you record the vehicle in your business minutes as a business vehicle and you pay all expenses from the company, the vehicle is treated as fully deductible even if it is titled in the owner’s name. This assumes, of course, that you actually use the vehicle for business.