If you are shopping around for a big “no cash outlay” tax deduction, this might be it.
First, let’s rephrase the “no cash outlay” to “prior year sunken cost.” Why? Because this strategy works by converting your previously purchased existing personal vehicle to business use.
We are going to take the personal non-deductible money you or your spouse spent on that previously purchased personal vehicle and make it tax deductible. And it could be a big deduction.
Example. Sam has a 2022 personal vehicle with a tax basis for depreciation of $31,000. With 70 percent business use on this One Big Beautiful Bill Act (OBBBA)–enacted 100 percent bonus depreciation qualifying vehicle, Sam has (this year, 2025) a new $21,700 tax deduction ($31,000 x 70 percent).
Let’s examine what you would need to do to make this work for you and how much you could write off this year.
Depreciating a Former Personal Vehicle
When you convert a personal vehicle to business use, the law sees you as placing the item in service in your business at that time. That means you can begin depreciating the asset and claiming ... Log in to view full article.
