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Old 10-30-2017, 02:16 PM
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Section 179 SUV Deduction with a 1031 Exchange?

May I 1031 exchange a Section 179 SUV?

And if so, what will be my allowed tax write offs &/or Tax liability...

In October 2017 I bought a $25,000 used SUV; (100% for business use, and I plan to take a Section 179 deduction for $25,000 on my 2017 tax return); and then...

In January of 2018 , can do a 1031 exchange if I trade it in for a $45,000 used SUV (Used 100% for business in 2018);

Would I also be able to write off any (or all) of the additional $25,000 out of of pocket paid for the newer, traded in SUV, in 2018, ($45,000 purchase price minus the approximate $20,000 trade in value of the original SUV) as a Section 179 Deduction?

Thank you,

BH-Realty


Last edited by BH-Realty : 10-30-2017 at 02:18 PM.


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Old 10-30-2017, 10:08 PM
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Would I also be able to write off any (or all) of the additional $25,000 out of of pocket paid for the newer, traded in SUV, in 2018, ($45,000 purchase price minus the approximate $20,000 trade in value of the original SUV) as a Section 179 Deduction?========>>inyour case, no you can not write off part of your purchase price even in sec 1031 excahnge trnasasction. You have Section 1031 issues here, as well as possible Section 179.; Whenever you sell your business property and you have a gain, then, you generally have to pay tax on the gain at the time of sale. Say, for example that you sell a purple duplex for $100k and you buy a replacement property for $90k. You did not buy equal or up; in fact you bought down. As a result, the $10k buydown is taxable, the entire $10k is taxable, and you do not apportion any of the original cost of the duplex to this gain.however as you can see,Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind sec 1031 exchange. So, you may defer your gain only when the net fair market value of the used SUV sold must be equal to or greater in the replacement biz asset, the other used SUV, to defer 100 % of the tax. Otherwise,you, as an Exchangor , need to pay tax on the gain.In a 1031 exchange, your relinquished used SUV used section 179 when purchased. Youdo not need to recapture the section 179 in a 1031 exchange since the used SUV, your biz asset, was disposed of in trade, and also the Asset usage was not reduced to less than 50% business use.basically, fully tax free sec 1031 exchange has also always required acquiring replacement property costing at least as much as the net sales price of the old one.There is no requirement to go from one vehicle to one. You can exchange into multiple ones. However, you have to be careful that each of the replacements is used more than 50% for business or else it will trigger some Sec. 179 recapture as mentioned several timers previously



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