People are Die Hard Fans of Tesla and they absolutely love Model X. Not only its a great looking SUV but it comes with best tax benefits. Some buy it as its electric and many buy it because they can use this vehicle for conducting their business and get thousands in tax write offs.
In this article we will be discussing Tesla Model X Tax Write Off 2022-2023.
Tesla Model X Tax Write Off
In order to write off a Vehicle it need to meet many requirements for you to be able to take it as a Tax Write off. These requirements include but are not limited to
Business Percent Use
IRS requires you to keep track of your miles so you can determine if you are using your business vehicle 70% for business or 90% for your business. You are only allowed to write off the amount that is used for business and not for personal.
Ordinary and Necessary
In order for the Tesla Model X Tax Write off to be allowed, it need to be ordinary and necessary in the field of work you are in. For example in construction, you will need pickup to haul materials. That will be considered Ordinary and Necessary.
Furthermore, If you are a Luxury Home Realtor or a Tech Executive, then Tesla Model X may be a tax write off as your Customers Expect you to take them out in a luxury vehicle showing them $2 or $5 million dollar properties.
Gross Vehicle Weight
If the Vehicle is 6000 pounds or more, then you are allowed to write off full value of the vehicle as long as its 100% business use and placed in the service in the year you are doing the tax write off for.
If any vehicle is less than 6,000 pounds max you can do in 2022, is $18000 first year and remaining over 5 year period.
Tesla Model X Lease Vs Purchase
Lease Example & Calculation
If you lease a vehicle, you get to write off the actual amounts you paid for example if you lease Tesla Model X( 36 Month Lease) and Put $18,000 Down Payment(Lease Buy Down) and $1500 Per month for the entire year. Then you write off the lease as following:
Lease Deposit $18000 Divided by Lease Term 36 Months So you will get $6,000 Per Year
Yearly Lease Payment: 1500 Times 12 Months is $18,000
Total Write off $6,000 Plus $18,000= $24,000
Purchase Example & Calculations:
If you purchase the Model X for $100,000 and put down $20,000 and finance the remaining over 60 months the calculations will work the following way assuming 100% business use:
Since Model X is 6,250 lbs. so it qualify for vehicles equal or more than 6000 pounds, you can either deduct the entire $100,000 in the first year(if you have enough profit) or deduct a portion( Example $50,000) of it and spread the remaining($50,000) over 5 years.
You can take Standard mileage deduction of 56 cents( in 2021) a mile but we do not recommend that as the actual deduction in this case will significantly more than Standard mileage deduction.
Tesla Model X Tax Write off Weight
2022 Tesla Model X Gross Vehicle Weight 6,250 lbs. Model X Qualifies for the 6000 Pound or more requirement(Per IRS) and using a combination of Section 179 and Bonus Depreciation.
Tesla Model X Tax Write off California
California has very specific rules pertaining to depreciation and limits any Section 179 to $25,000 Maximum per year. So for example, if you purchase a vehicle for $100,000,
you can write off $25, 000 as Section 179 in first year and remaining amount of $75,000 in this example has to be spread over 5 year period.
While IRS allows Bonus Depreciation, California doesn’t allow Bonus depreciation and the entire amount is added back to your State return where it is taxed.
Section 179 Deduction
Internal Revenue Code, Section 179 Deduction allows you to expense up to 25,000 on Vehicles(One year) that are between 6000 Pounds and 14,000 Pounds or More in the year they are placed in service.
If you are looking to write off the entire purchase price of Tesla Model X, look into Bonus depreciation rules that were passed under TCJA. We have more details below.
To learn more about Section 179 See IRS Section 179 Details here
Bonus Depreciation has been significantly improved by the Tax Cuts and Jobs Act.
Under new TCJA, Bonus Depreciation allows you to deduct a specified percentage of the cost of assets in the year they are placed in service. This deduction allows you to take your profit to negative as compared to Section 179 which only allows you to break even or make your profit zero.
For SUV’s such as Tesla Model X that are 6000 pounds or more, can be deducted 100% in the year purchased and placed in service.
Tip: Under Bonus Depreciation rules, you can even purchase a Used Tesla Model X and use Bonus Depreciation as well.
Can I Claim Business Mileage on My Tesla Model X ?
Yes you can claim business mileage deduction on Tesla Model X.
We recommend if you drive the Your Tesla Model X for more than 50% for work then you reconsider mileage and use Actual vehicle deduction instead.
Section 179 and Bonus depreciation provides very nice depreciation along with your Fuel, Repairs and Vehicle Insurance. These Actual Deductions can add up to be more than Mileage Deduction.
Can you take Section 179 or Bonus Depreciation on your Tesla Model X if it is Financed?
Yes, You can finance your Tesla Model X by putting minimal down and still take section 179 or Bonus depreciation on the vehicles.
For example if you are purchasing your Tesla Model X for $100,000, you can put $20,000 down payment, finance remaining $80,000(over 5 years) yet still claim $100,000 in tax deduction using section 179 and Bonus Depreciation.
It’s that time of year again when we all have to start thinking about our taxes.
And for people who own a Tesla Model X, there may be some good news.
The IRS allows a tax write off for luxury vehicles, which means that you can get some of your money back from the government.
So if you’re looking to buy a new car this year, and you’re considering a Tesla Model x, now is the time to do it! And who knows, maybe you’ll even get a refund in the end.
So check with your Tax Preparer or CPA and see if taking advantage of the Tesla Model X tax write off is right for you.