Tax advantages of buying new IBA

[soonermajic]

What kind of tax advantages are there on buying a new IBA? Let's say you installed one for $100,000.
What type of advantages can you realize? Does it matter if it does really good or bad?

 

[soonermajic]

So, are there any tax advantages of buying a new IBA?

 

[wash12]

So, are there any tax advantages of buying a new IBA?

Depreciating it over X amount of years.

 

[mac]

Let me put my salesman's hat on. Yes, there are tax advantages. It might have been Trump, not sure, but now you can write off the entire cost in the first year, so long as it's in operation that year. before you had to write it off over a 5 year period. So if you are looking at a tax bill of 100K, then do it. It's like getting a free machine.

 

[soapy]

A quick heads up for operators running as a sole proprietor. I was a reading a article in Automotive Laundry News and with the new tax laws you will only be able to deduct $10,000 of property tax. For many of us when you combine house property tax and more than 1 wash you can easily go over the 10K mark. FOr me I will loose a $20,000 write off if I don't restructure to a Sub S or LLC.

 

[Rfreeman]

Sooner,

Google Section 179 of the tax code that will give you some insight.

 

[Greg Pack]

Depending on your bracket you will get tax savings, but it still costs much more to buy a new machine than you will save on taxes. If the machine is worn out and unreliable, or you want a new machine/system that will generate more revenue you can perhaps justify it.

 

[soonermajic]

I think I can justify adding a 2nd IBA, but was just curious about the new machines tax advantages. Heck, nearly any at all is gonna be a bonus !!

 

[Ghetto Wash]

A quick heads up for operators running as a sole proprietor. I was a reading a article in Automotive Laundry News and with the new tax laws you will only be able to deduct $10,000 of property tax. For many of us when you combine house property tax and more than 1 wash you can easily go over the 10K mark. FOr me I will loose a $20,000 write off if I don't restructure to a Sub S or LLC.

You got me worried. I can't find anything to support this. Everything I find that limits write off's to $10,000 refers to personal homes. Rental property and businesses don't adhere to this limitation.

Read page 89 of this PDF or page 87 of the original document, lines 15-20. It basically says that this limitation does not apply if you are carrying on a trade or business (doesn't exclude sole proprietors).

http://apps.washingtonpost.com/g/documents/business/read-the-full-gop-tax-bill/2678/

I also looked at the website for TurboTax by Intuit. They say that property tax for rentals and business are an "expense" and not a "deduction" and there will be no changes for what you enter for 2018.

 

[Jeff_L]

I would ask your accountant for the right answer. There is a limit to how much you can right off each year depending on some variables.

 

[slash007]

You got me worried. I can't find anything to support this. Everything I find that limits write off's to $10,000 refers to personal homes. Rental property and businesses don't adhere to this limitation.

Read page 89 of this PDF or page 87 of the original document, lines 15-20. It basically says that this limitation does not apply if you are carrying on a trade or business (doesn't exclude sole proprietors).

http://apps.washingtonpost.com/g/documents/business/read-the-full-gop-tax-bill/2678/

I also looked at the website for TurboTax by Intuit. They say that property tax for rentals and business are an "expense" and not a "deduction" and there will be no changes for what you enter for 2018.

From what I understand, the 10k cap is on personal homes only.

 

[soonermajic]

Ok, let's say I spend $125,000 on new IBA. How much, & how will, that help me tax wise (or any advantage I gain)?

 

[BBE]

I'm pretty sure that's a question for your cpa. It depends on what your financial picture looks like for the fiscal year.

 

[Greg Pack]

I'm pretty sure that's a question for your cpa. It depends on what your financial picture looks like for the fiscal year.

This is the correct answer. Don't buy a 150K auto just to save 20K on a tax bill.

 

[soonermajic]

But if you really need the IBA, I'd be ecstatic with a 20% savings.