Can you deduct a car purchase from your taxes?
It’s that time of year again – tax season. And if you’re like many Americans, tracking down all your expenses can be a big hassle. Even more so if you’re not sure exactly what can be deducted. If you bought a vehicle this year and are wondering if the interest tax can be deducted, it is possible depending on your vehicle purchase.
[Read more: What does APR mean in your car loan?]
In short, your car’s interest is tax deductible, only if it’s a business vehicle. Costs like gas, taxes and insurance are already factored into the standard mileage rate, which includes the actual car operating costs. If you choose the standard mileage rate, you can still deduct the interest on a car loan, parking fees and tolls for business trips and personal property tax that you paid when you bought the vehicle, based on its value.
If your vehicle purchase was for a business vehicle, then your auto loan is also tax deductible. While this is not the case for a personal car, the loan for the car you use for your business is deductible, as well as the interest if you take out a home equity loan to buy a business vehicle. That being said, if you’re an employee, you can’t deduct interest on a car loan, even if you use it 100% for your job. In that case, you can only deduct the business use percentage of interest and taxes on a car you use for business and personal reasons.
[Read more: Get help with your taxes in Green Bay]
To speak with a professional about your taxes, or if you have any questions about whether or not you can deduct your car purchase, feel free to contact us here at Broadway Auto Credit. Our helpful staff is always here and ready to give advice where you need it!