Keep in mind that you must document your business mileage and total mileage to determine what percentage of your use is deductible. Also keep in mind that if your business use falls below 50%, you cannot make the Expensing Election (Section 179) that would get you to the $25,000 deduction.

Zip Code: 43085

I have owned my SUV for over 5 years, and it is now time to get an updated vehicle. Is it better to trade in the SUV, or sell the old SUV and get a new SUV separately? The new SUV will also be over 6000 lbs.

Paul

Zip Code: 92009

For most business vehicles, you are generally better off selling the vehicle than trading it in. That's because the depreciation you can claim on most cars is limited, so by selling the car, you end up taking a loss on your business tax return. In other words, the value of the car decreases quicker than the depreciation you are allowed to claim.

If you trade in your vehicle, you will add the undepreciated portion of your car to the amount you paid for the new car, which will leave you with an over-inflated cost basis for your new car.

For an SUV with a gross vehicle weight in excess of 6,000 pounds, however, you are allowed to claim more depreciation up front. For that reason, you might not be in too bad of shape if you trade-in that SUV for a new one after holding the SUV for at least 5 years. You just need to compare the undepreciated basis in the SUV with its current fair value.

Zip Code: 01801