I started my home remodeling business little over a year back. Last year was first full year in business. I generated a little over $45000. Besides the normal business expenditure, I also bought a second had truck. This is a 100% business use vehicle. The truck cost $11700. I have financed $8700 of the vehicle. Is there a way to deduct this truck under the section 179 rule? ========>it depends; For passenger vehicles, trucks, and vans that are used more than 50% in a qualified business use, the total deduction for depreciation including both the Section 179 expense deduction is limited to $11,160 for trucks and vans. However, for a work truck to qualify for the Sec 179 deduction, it must be rated at more than 6k lb. gross vehicle weight rating. Trucks or vans commonly referred to as 3/4 ton qualify; half-ton trucks do not. Trucks must also have a full-sized truck bed at least 6 feet long. Cargo vans with no seating behind the driver also meet the requirements. To use the Section 179 deduction, you need to avoid buying pickup trucks with short-bed cargo boxes; You would need some means of apportioning business and personal use and mileage logs are a good way to substantiate that. If you claim to use it exclusively for business use but don't keep mileage logs or other records to substantiate your claim, the IRS would look at the facts at hand in deciding if that was true. Owning another vehicle for personal use certainly helps to substantiate that claim.
And if yes, do I get to deduct the full cost or what I have paid for so far? If I can't deduct it under that rule, what other options are open to me? Can I also get to deduct the cost of operating it? ========>Instead of depreciating your business assets, Section 179 of the tax code gives you an alternative deduction. Depreciation gives you a small write-off on tangible personal property, year after year. With the Section 179 deduction, you can write off 100 percent of the cost in the year you buy it. Section 179 will be permanent at the $500k level. Businesses exceeding a total of $2 million of purchases in qualifying equipment have the Section 179 deduction phase-out dollar-for-dollar and completely eliminated above $2.5 million. Additionally, the Section 179 cap will be indexed to inflation in $10k increments in future years.