Need advice on purchasing a vehicle as a tax deduction for my new LLC

Does the LLC have to purchase the vehicle directly, or can I buy it personally and then get reimbursed by my LLC for the business use portion? My bank said something about the auto loan being harder to get for a new LLC vs me personally.

You have two options. You can either buy it personally and have your LLC reimburse you for business mileage using the standard mileage rate (around $0.67/mile for 2025), which is simpler but usually results in smaller deductions. Getting the loan personally but using the vehicle for business is common for new LLCs. You can still take depreciation deductions based on business use percentage, but you'll need to keep detailed records separating business vs. personal miles. Make sure your LLC reimburses you properly for business use to maintain the separation between personal and business finances.

Does it work for single-member LLCs too? I file Schedule C with my personal taxes and am not sure if the rules are different for me vs. multi-member LLCs.

How accurate is this actually? I've been burned before by online calculators that didn't factor in all the limitations and phase-outs. Does it account for the luxury auto limits and business-use percentage requirements?

Yes, it absolutely works for single-member LLCs. It asks about your business structure during setup and tailors everything specifically to Schedule C filers, showing you exactly where the deductions will appear on your tax forms. For accuracy, that's what impressed me most. It factors in all the current luxury auto limits, the special rules for heavy SUVs and trucks, and even calculates the recapture risk if your business use percentage drops in future years. It's much more comprehensive than any calculator I'd used before.

Wait, how does this even work? I thought nobody could get through to the IRS these days. Is this some kind of premium service that costs a ton? The IRS phone system is notoriously impossible.

Sounds sketchy. Why would anyone need a service to call the IRS? I've gotten through before, it just takes patience. Plus the IRS website has all this info already if you know where to look. Seems like a waste of money.

It's not a premium line to the IRS - they use technology to navigate the IRS phone system and wait on hold for you. When they reach an agent, they call you and connect you directly. I just went about my day instead of sitting on hold for hours. No, the IRS website doesn't have all the nuanced info, especially for specific situations. The agent I spoke with clarified that for vehicles between 6,000-14,000 pounds, there are special documentation requirements if you claim more than 50% business use. That specific detail wasn't clearly explained anywhere online and could have caused issues if I got audited.

Totally agree! Also worth considering - insurance is usually higher on those bigger vehicles, and depending on your state, registration fees might be significantly more too. Have you calculated if the tax savings actually offset these additional costs?

You're absolutely right about the additional costs. I did the math recently and while I saved about $7,500 in taxes with the bigger deduction, I'm spending about $2,200 more per year on gas, $800 more on insurance, and my state charges higher registration fees based on vehicle weight. The tax savings were front-loaded (mostly in year 1), but these extra costs continue every year. If I had gotten a more efficient vehicle, I'd probably break even by year 3 and then come out ahead after that. Definitely something for everyone to factor in!

Leasing can be simpler tax-wise because you just deduct the lease payments for the business use percentage. No complicated depreciation calculations. But you might get a smaller overall deduction compared to Section 179 on a purchase, especially for those heavy SUVs and trucks.

This is really helpful advice about the actual expense vs. mileage rate choice! I had no idea you get locked into the actual expense method once you choose it. That's definitely something to consider carefully. Quick question - when you mention "recapture issues" if business use drops below a certain percentage, how does that actually work? Like if I claim 70% business use in year one but it drops to 40% in year three, do I have to pay back some of the Section 179 deduction I already took? And is there a specific threshold where this kicks in? Also, which phone app do you use for mileage tracking? I've been looking for something automatic since manually logging every trip sounds like a pain.

Yes, you're exactly right about the recapture situation! If your business use drops below 50% in any year after taking Section 179, you have to "recapture" part of the deduction - essentially paying back some of the tax benefits you received. The IRS treats it as if you received excess depreciation that you weren't entitled to. So in your example, if you claimed Section 179 on 70% business use but then dropped to 40% in year three, you'd have to add back some of that deduction as income on your tax return. It can be a pretty significant hit if you took a large Section 179 deduction initially. The 50% threshold is the key number - you need to maintain at least 50% business use to avoid recapture issues with Section 179. Regular depreciation doesn't have this same recapture rule, which is why some people prefer the more conservative approach. For mileage tracking, I use MileIQ - it automatically detects trips using GPS and you just swipe to classify them as business or personal. There are other good options like Everlance and QuickBooks Self-Employed too. The automatic tracking is definitely worth it since manually logging every trip gets old fast!

This is super helpful about the timing aspect! I didn't realize Section 179 wasn't prorated like regular depreciation. That's actually perfect timing for my situation since I was worried about "losing" part of the deduction by buying later in the year. Quick question about the GVWR - is this something I should specifically ask the dealer about when I'm shopping? I'm looking at a few different SUVs and want to make sure I'm comparing apples to apples from a tax perspective. Also, do certified pre-owned vehicles qualify for Section 179 the same way as brand new ones, or are there different rules for used vehicles? I'm definitely going to start that mileage log from day one - thanks for the reminder about contemporaneous records. The last thing I want is to get audited and not have proper documentation!

Yes, definitely ask about the GVWR when shopping! Most dealers will know this off the top of their head, but if not, it's always listed on the door placard or in the vehicle specs. Some vehicles are right on the borderline - like certain Honda Pilots are just under 6,000 lbs while others barely make it over depending on the trim level and options. Used vehicles absolutely qualify for Section 179 just the same as new ones! The deduction is based on what YOU pay for it (your basis), not the original purchase price. So if you buy a used SUV for $35,000 that originally cost $50,000, your Section 179 deduction would be based on the $35,000. This can actually be a sweet spot - getting a heavy vehicle that qualifies for the enhanced deduction at a lower cost basis. One thing to watch with used vehicles though - make sure you get good documentation of the purchase price and any dealer fees, since this becomes your depreciable basis. Also, if you're financing, only the purchase price counts for Section 179, not the total of all your loan payments including interest. Smart move on starting the mileage log immediately. I've seen people try to reconstruct their business miles months later and it never looks good to the IRS. Even if you think you'll remember every trip, trust me, you won't!

This is really solid advice about getting pre-approved for financing first! I'm actually in a similar situation with my new LLC and hadn't thought about how my current vs. projected income should factor into the Section 179 decision. Quick question about state tax conformity - do you know if there's an easy way to check which states don't follow federal Section 179 rules? I'm in California and want to make sure I'm not missing something important. Also, when you mention bringing vehicle options to an accountant for analysis, what specific information should I gather beforehand to make that consultation most effective? I'm definitely leaning toward getting that professional input before making such a big financial decision, especially since the tax implications seem pretty complex once you factor in all these variables.