Pay Monthly or Pay-Off
From: Diamond Springs CA Dear TaxMama, I am a self-employed Realtor. I only work part time and will not have alot of mileage to deduct. Is it better to pay off my vehicle and use it as a depreciating asset for business? Or should I keep making my loan payments and use those as a write-off and invest the amount I would use to payoff the car - about $10,000? Thank you. Phoebie
Dear Phoebie, For tax purposes, it makes little difference if you pay the car loan off or not. You get to depreciate the car either way. The only difference is that with the loan payments, you get to deduct the interest expenses - but, you have to make those monthly payments. You won't get any extra deduction for spending that $10,000 to pay off the loan. From your question, though, I kind of get the impression that you need to know a little bit more about all the things you can write-off using your car - and how the whole thing works - the expenses, depreciation and everything. Invest the $10 or $15 to pick up a copy of the book: Small Business Taxes Made Easy You're going to get SO much out of it, to help you with your real estate business and your taxes. Best Wishes,
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