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Plan to Buy a New Truck on December 31?

Are you considering buying a new vehicle or truck before the last day of the year?  Do you want to know how much can be deducted for depreciation in the first year?

The deduction depends if the vehicle is an automobile rated less than 6,000 GVW, truck or van between 6,000 and 14,000 GVW and a non-personal use vehicle over 14,000 GVW.

Passenger vehicles are called Listed Property by the IRS and depreciation is subject to the luxury-auto limits of Code Section 280F.  You may be allowed to take bonus depreciation, but the deduction is limited.

The maximum depreciation deductions for trucks and vans are higher than those for other passenger automobiles.  If the truck or van is new and business use is over 50%, then the deduction in year 1 is $11,160.  If the truck or van is a used (pre-owned) vehicle the depreciation is limited to $3,160 in year 1.

Certain non-personal vehicles are exempt from the luxury auto limits.  These include trucks and vans that have been modified so that they are not likely to be used more than a minimal amount for personal purposes, such as delivery trucks or any vehicle with a loaded gross vehicle weight of over 14,000 lbs.  Depreciation for non-personal vehicles are not limited and the entire purchase price can be deducted using Section 179.

If you purchase an SUV, truck or van (6,000 GVW to 14,000 GVW) you can take a Section 179 deduction of $25,000 in year 1.