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Old 02-12-2004, 12:15 PM   #1
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6000# tax deduction

Did any one know that the section 179 tax loophole that allowed a business owner to deduct 100% of the purchase price of a 6000# gvw is going to be phased out at year end. Any one that has any knowledge of this phase out please let us know.
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Old 02-12-2004, 12:29 PM   #2
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There is no "phaseout" in the current tax code. Congress has increased the deduction to $100, 000 for 2003 & 2004 from $24, 000 in 2002.
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Keith (CPA)
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Old 02-12-2004, 01:01 PM   #3
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Tax code

. . . . . and we wondered why there are so many H2 hummers with magnetic signs all of a sudden?
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Old 02-12-2004, 05:11 PM   #4
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It is being talked about - nothing yet. Some congress folks are upset by the agressive car salespersons out there bragging about this.

The reason the limitations went into effect in the first place was because a full page ads advertising Rolls Royces showing how you could own one for little money because of the tax deductions sooooo someone in the government got upset about that and changed placed limitations on auto deductions.

I've always felt that people should be mum about this stuff, but short term thinking..................

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Old 02-13-2004, 11:03 AM   #5
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There are certain restrictions in place in the tax code to limit the benefit for vehicles utilized for both business and personal uses.

The concept that the puffing that a vehicle sales person makes to solidify a sales transactions is an influence to a taxpayer is about as valid the puffing that a real estate agent makes to show that the after tax cost of home ownership is lower than renting.

The general public is more educated that they are given credit for. (Ask most people who leased their automobile if they would do it again. Most educated people who have a good credit rating or access to financing would refrain from leasing. - Heavily subsidized leases like Jaguars excluded)

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Old 02-13-2004, 11:17 AM   #6
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Hmmmmmmmm

Real estate agents do that all the time....... especially when selling commerical property

Lots of folks are leasing cars

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Old 02-13-2004, 11:42 AM   #7
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As a former (10 years+) auto finance manger- I will disagree on the negative leasing comment.
I have leased my own cars for years, and it has always worked well for me. No money down, low payments, 3 year leases with a matching length warranty.
I always turn them in at the end also, and the dealer will usually eat the cost of new tires, and such if I lease another.
The wrong thing is the people who lease long term to get a Benz or some highline car they can't afford any other way, and are so buried in it they can't ever get out early.
The dealers advertise 60-84 months leases and financing...and that is simply nuts. Thtas where the term "upside down" comes from. Boy, is that ever common.
An informed buyer who goes short term with the cap cost at a negotiated low level, and utilizes factory incentived leases can do very well. Be careful of the trade in value also if you trade a car in on a lease.
Also the manufacturers have gotten smarter and are cutting the high residual values that lowered the payments in the past, but made buyouts impossible. Now they use lower interest rate calculations and more realistic residuals so buyouts even look more attractive...although I would probably never do one myself. Turn it in, walk away. Get something else. I drive a brand new Grand Cherokee for low 300s a month.
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Old 02-13-2004, 12:30 PM   #8
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ALANSD,
You make some good points. It seems our society has shifted from the mindset of ownership and building equity to the mindset of renting (or how much it cost me to live today). Most, but not all leasee, realize that at some point they cannot (or will not) drive a new automobile every three years because of the high imputed cost of depreciation. This point might come at retirement, at age 50 years, 40, 30, or for the financially astute, when they purchase their first automobile. Consider the recommendation a parent would give their college bound child, would it be to buy a vehicle or lease one? Why would the recommend change over time? Why recommend to someone to drive a vehicle that they cannot afford?

I am not knocking leases. By other people leasing their vehicles and generating tremendous short-term profit for dealers, third-party leasing companies and banks, I can have a lower operating cost of my vehicle and other personal and business assets. This is because my purchase doesn’t have to carry as much of the profit burden of the sales operation.

Keith
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