Most tax preparers know that companies depreciate the cost of their 6,000+-pound trucks and/or delivery vehicles over a five-year period. However, with more and more business owners investing in Sport Utility Vehicles (SUVs) as their primary car, the tax rules regarding weight limits of vehicles are providing a break for many professionals.
Higher depreciation provides an incentive to buy the SUV. For example, the choice between a Mercedes Coupe and a Chevrolet Suburban would yield a greater tax savings with the Suburban because of the weight of the car--more than 7,000 pounds.
Cars weighing under 6,000 pounds can be depreciated, of course, but the cap for doing so in 1999 was $3,060 the first year, $5,000 the second year, $2,950 the third year, and drops to $1,775 in the fourth and succeeding years (these amounts are subject to change each year). Many drivers would not recover the cost of the car before it's sold or traded for another one.
These luxury car limitations do not apply to vehicles that weigh more than 6,000 pounds, thus the SUVs escape the limitations on depreciation.
Naturally, the deductions indicated on the tax returns must reflect the actual use of the vehicle. If the vehicle isn't used all the time for business purposes, then only a proportionate amount of depreciation may be deducted.