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Selling My Business Car Creates A Loss, Can I Deduct It Even If I Am Still Making Payments On The Difference?

Selling My Business Car Creates A Loss, Can I Deduct It Even If I Am Still Making Payments On The Difference?

Postby Russ » Mon Nov 10, 2014 6:31 pm

I use my car for business 85% of the time. It is financed, the loss will be about 5K. I am self-employed and have decided to limit my liabilities. I was just reading a tax deduction book that mentioned being able to deduct the loss from a sale or trade in of a car. Can I deduct the whole 5k if I am still making payments on the loan?
Russ
 
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Selling My Business Car Creates A Loss, Can I Deduct It Even If I Am Still Making Payments On The Difference?

Postby Brychan » Tue Nov 11, 2014 1:15 am

This country has an obsession over cars. It sort of makes sense considering how most of our cities are laid out and the desire for suburban living basically requires almost everyone to not only own a vehicle, but to spend a considerable amount of time in it while going from place to place.While just having a car isn?t a bad thing, most people don?t fully realize how much of their wealth is getting flushed down the drain while owning a car. They are expensive, depreciate in value rapidly, you have to regularly fill them with gas, and insure them. That really starts to add up.A Typical Cost BreakdownSo, just how much is that car costing you? Let?s take a look at a typical vehicle and scenario that would fit almost any middle class American household. We?re going to use a new Toyota Camry and these sell for anywhere from about $20,000 ? $30,000 depending on features and your location. So, we?ll shoot for something right in the middle of the pack and assume for this example that someone finds one for $25,000. And let?s not forget about sales tax since that?s going to apply to most people as well. 6% is a fairly common state sales tax rate so if we tack that on to the price of the car we have a total sale price of $26,500.It really doesn?t matter what kind of car we?re talking about or even whether it?s new or used. What?s important is the actual price paid.FinancingNow let?s talk financing. Most people don?t pay cash for their new car and will typically finance it for somewhere between 3 and 5 years. In addition, most people don?t put a significant down payment down or will trade in their old car. For the sake of this example we?ll assume that we?re putting $5,000 down or getting $5,000 for a trade. That means we?re left financing $21,500, and let?s shoot for a 48 month loan. Rates on this type of loan right now are averaging around 7% so we?ll go with that. That ends up adding $3,200 in interest payments over the life of the loan and a monthly payment of about $512.
Brychan
 
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Selling My Business Car Creates A Loss, Can I Deduct It Even If I Am Still Making Payments On The Difference?

Postby Christoph » Tue Nov 11, 2014 7:00 am

PamPerdue said: 3 I believe Gary is correct. The loan is an independent operation from the purchase of the vehicle. You own the vehicle. The lien restricts some of the things you can do, but it shouldn't have tax implications.In fact... are you going to be able to sell it if you still owe payments after the sale? Ordinarily the loan comes with a lien on the car, and you can't sell it while it's encumbered like that without coordinating that sale with the bank holding the loan. The car is the loan company's collateral on the loan, and they don't want you selling it, since then they can't repossess it if you stop making the payments.There are mechanisms for selling a car you still owe payments on. Often you end up having to conduct the sale at the bank so they get to watch the money move. 73 months ago
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Selling My Business Car Creates A Loss, Can I Deduct It Even If I Am Still Making Payments On The Difference?

Postby Lathrop » Tue Nov 11, 2014 8:15 am

Selling my business car creates a loss... Once you have determined that you cannot afford your car you may be tempted to stop paying on it, and simply turn it back over to the bank. While this is an option, it is not a wise one. This will affect your credit negatively. Additionally this does not release you from all of the obligation on the loan. Once the bank sells the car you will end up owing the difference to the bank. The bank will come after you to make sure that they do not lose any money.You may decide to trade the car in for a less expensive one at the dealer. While this may lower you monthly payment, you will still have to pay back all of the money. The dealer will roll any excess that you owe on the loan into your next car loan. This means that you will be upside down on your new car. Your payments may last a lot longer.Your best option is to try to sell the car yourself and take out a personal loan to cover the difference in the amount you owe. When you complete a private sell, you are able to get more for the car, than you would if you were going to sell it to a dealer. This is because you are cutting out the middleman. You may wondering about taking out a loan in order to sell your car, but this will help you to reduce your overall debt. Sources: http://moneyfor20s.about.com/od/gettingoutofdebt/f/cantaffordcar.htm Gillgarey 60 months ago Please sign in to give a compliment. Please verify your account to give a compliment. Please sign in to send a message. Please verify your account to send a message.
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Selling My Business Car Creates A Loss, Can I Deduct It Even If I Am Still Making Payments On The Difference?

Postby Parry » Tue Nov 11, 2014 2:47 pm

I believe Gary is correct. The loan is an independent operation from the purchase of the vehicle. You own the vehicle. The lien restricts some of the things you can do, but it shouldn't have tax implications.In fact... are you going to be able to sell it if you still owe payments after the sale? Ordinarily the loan comes with a lien on the car, and you can't sell it while it's encumbered like that without coordinating that sale with the bank holding the loan. The car is the loan company's collateral on the loan, and they don't want you selling it, since then they can't repossess it if you stop making the payments.There are mechanisms for selling a car you still owe payments on. Often you end up having to conduct the sale at the bank so they get to watch the money move.
Parry
 
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Selling My Business Car Creates A Loss, Can I Deduct It Even If I Am Still Making Payments On The Difference?

Postby Raoul » Wed Nov 12, 2014 1:25 am

Once you have determined that you cannot afford your car you may be tempted to stop paying on it, and simply turn it back over to the bank. While this is an option, it is not a wise one. This will affect your credit negatively. Additionally this does not release you from all of the obligation on the loan. Once the bank sells the car you will end up owing the difference to the bank. The bank will come after you to make sure that they do not lose any money.You may decide to trade the car in for a less expensive one at the dealer. While this may lower you monthly payment, you will still have to pay back all of the money. The dealer will roll any excess that you owe on the loan into your next car loan. This means that you will be upside down on your new car. Your payments may last a lot longer.Your best option is to try to sell the car yourself and take out a personal loan to cover the difference in the amount you owe. When you complete a private sell, you are able to get more for the car, than you would if you were going to sell it to a dealer. This is because you are cutting out the middleman. You may wondering about taking out a loan in order to sell your car, but this will help you to reduce your overall debt.
Raoul
 
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Joined: Thu Feb 06, 2014 3:10 pm

Selling My Business Car Creates A Loss, Can I Deduct It Even If I Am Still Making Payments On The Difference?

Postby Dallton » Wed Nov 12, 2014 8:05 pm

You can deduct just about anything. The difficult part is being audited. You should get an opinion from IRS and even a tax consultant could help for a fee. I do not see the problem with the loan, the deduction should be independent of that.
Dallton
 
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Selling My Business Car Creates A Loss, Can I Deduct It Even If I Am Still Making Payments On The Difference?

Postby pyrs59 » Wed Nov 12, 2014 11:25 pm

Gary4books said: 2 You can deduct just about anything. The difficult part is being audited. You should get an opinion from IRS and even a tax consultant could help for a fee. I do not see the problem with the loan, the deduction should be independent of that. 73 months ago
pyrs59
 
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Selling My Business Car Creates A Loss, Can I Deduct It Even If I Am Still Making Payments On The Difference?

Postby Andonis » Thu Nov 13, 2014 7:19 am

Your Car is Making You Poor And What You Can Do About It This country has an obsession over cars. It sort of makes sense considering how most of our cities are laid out and the desire for suburban living basically requires almost everyone to not only own a vehicle, but to spend a considerable amount of time in it while going from place to place.While just having a car isn?t a bad thing, most people don?t fully realize how much of their wealth is getting flushed down the drain while owning a car. They are expensive, depreciate in value rapidly, you have to regularly fill them with gas, and insure them. That really starts to add up.A Typical Cost BreakdownSo, just how much is that car costing you? Let?s take a look at a typical vehicle and scenario that would fit almost any middle class American household. We?re going to use a new Toyota Camry and these sell for anywhere from about $20,000 ? $30,000 depending on features and your location. So, we?ll shoot for something right in the middle of the pack and assume for this example that someone finds one for $25,000. And let?s not forget about sales tax since that?s going to apply to most people as well. 6% is a fairly common state sales tax rate so if we tack that on to the price of the car we have a total sale price of $26,500.It really doesn?t matter what kind of car we?re talking about or even whether it?s new or used. What?s important is the actual price paid.FinancingNow let?s talk financing. Most people don?t pay cash for their new car and will typically finance it for somewhere between 3 and 5 years. In addition, most people don?t put a significant down payment down or will trade in their old car. For the sake of this example we?ll assume that we?re putting $5,000 down or getting $5,000 for a trade. That means we?re left financing $21,500, and let?s shoot for a 48 month loan. Rates on this type of loan right now are averaging around 7% so we?ll go with that. That ends up adding $3,200 in interest payments over the life of the loan and a monthly payment of about $512. Sources: http://genxfinance.com/2009/06/18/your-car-is-making-you-poor-and-what-you-can-do-about-it/ newuser61774133 60 months ago Please sign in to give a compliment. Please verify your account to give a compliment. Please sign in to send a message. Please verify your account to send a message.
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