BMW Tax Advantage
BMW Tax Advantage
Tax Advantage
Driving a BMW is all about luxury. The streets of Grand Blanc, Fenton, and Midland, Michigan, are simply better in a luxury vehicle, whether you're cruising along Saginaw Road in pursuit of delicious food or using it for business. But did you know that your BMW model may be eligible for a tax deduction? A brand-new luxury car and tax breaks? What's not to love about that?
At BMW of Grand Blanc, we want to help you save as much money as possible on a brand-new luxury vehicle, especially if you're using it for business. Continue reading to find out more about BMW tax deduction conditions. Who knows, you might find some additional income in your bank account come tax season!
What Is a BMW Tax Advantage?
Is your company considering purchasing a new BMW X5, X6, or X7? If so, you may be able to save even more money in taxes. Because each of these vehicles has a Gross Vehicle Weight Rating (GVWR) greater than 6,000 pounds, the first year of ownership may be the best time to take advantage of the maximum depreciation allowance.
These BMW premium vehicles are classified as "heavy SUVs" due to their GVWR—the vehicle's maximum weight when fully loaded with people and/or goods. This classification allows them to serve as "transportation equipment" for your company, leading to significant tax savings.
What Are the BMW Tax Advantage Requirements?
Qualifying for BMW tax deductions is straightforward. Here's what you need to do:
Purchase a BMW luxury model with a GVWR of over 6,000 pounds, such as the BMW X5, X6, or X7.
Ensure this luxury automobile is used exclusively for work purposes.
It's that simple to qualify for significant tax benefits for your business!
What Will My Savings Be?
You may be eligible for increased first-year depreciation on qualified automobiles, such as the BMW X5, X6, or X7, under Sections 179 and 168(k) of the Internal Revenue Code. This means you can deduct 100% of the depreciation on your business's transportation equipment!
For example, if you acquire a BMW X7 for business usage, you can deduct 100% of the vehicle's depreciation, which can amount to over $90,000! Other luxury automobiles that do not qualify may only be eligible for a deduction of around 20%, or less than $20,000.
Additionally, you can continue to deduct depreciation as long as you use your BMW for business purposes. These deductions can be carried forward until the vehicle is fully depreciated or sold, leading to substantial savings over time.
TAX DEPRECIATION COMPARISON
Three comparisons are provided below that show the tax benefits for company owners who purchase a new BMW X5, X6, or X7 before December 31, 2021. To learn how this information can be applied to your specific business situation, please check with your tax specialist.
$66,750 BMW X5VS$66,750 LUXURY CARTotal allowable depreciation for 1st year of ownership* |
$78,300 BMW X6VS$78,300 LUXURY CARTotal allowable depreciation for 1st year of ownership* | $92,600 BMW X7VS$92,600 LUXURY CARTotal allowable depreciation for 1st year of ownership* |
| BMW X51 100% Depreciation $66,750 |
VS |
Luxury Car2 27% Depreciation $18,200 |
BMW X61 100% Depreciation $78,300 |
VS |
Luxury Car2 23% Depreciation $18,200 |
BMW X71 100% Depreciation $92,600 |
VS |
Luxury Car2 20% Depreciation $18,200 |
*Comparisons based on Section 179 and 168(k) of the Internal Revenue Code, which allows for additional first-year depreciation for eligible vehicles and reflects figures for owners who purchase vehicles for 100 percent business use and place vehicles in service by the end of the tax year.
**BMW X5/X6 shown fully depreciated in Year One.
***Luxury car depreciation can continue year two at $16,400, year three at $9,800, and subsequent years at $5,860 until the vehicle is fully depreciated or sold.
***With Gross Vehicle Weight Ratings (GVWR) of more than 6,000 pounds, these models are classified as “heavy SUVs.” Gross Vehicle Weight Rating (GVWR) is the manufacturer’s rating of the vehicle’s maximum weight when fully loaded with people and cargo.
†Comparisons based on Section 179 and 168(k) of the Internal Revenue Code, which allows for additional first-year depreciation for eligible vehicles and reflects figures for owners who purchase vehicles for 100 percent business use and place vehicles in service by the end of the tax year.